“The Governance Capacity of a Regional Biofuels Arrangement: the case of the Conciliation Table on

Biofuels in Lambayeque in Northern Peru”

By Marisel Allende Barchi

Wageningen University

10 August 2009 Wageningen, the Netherlands

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Title: The Governance Capacity of a regional biofuels arrangement: the case of the Conciliation Table on Biofuels in Lambayeque in Northern Peru.

Author: Marisel Allende Barchi Contact email: mariselallende@gmail.com Registration Number: 761130-011-070 Master Program: Forest and Nature Conservation Policy Period: 2007 - 2009 Thesis number: AV2009-26 Thesis code: FNP 80436 Thesis Supervisors: From forest and nature conservation policy group, Marjanke Hoogstra

and Marielle von der Zouwen University: Wageningen University and Research Center, NL. Date of printed: August 7th, 2009

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To my three men: Alfon, Alf and Tano.

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PREFACE The elaboration of the present thesis has taken from February to August 2009 at the Department of Forest and Nature Conservation Policy of the Forest and Nature Conservation Program of the Wageningen University, in the Netherlands.

Since the thesis has been written as the final requisite to obtain the Master in Science degree in forest and nature conservation policy, the content is primarily aimed to educational purposes. As a second aim, it tries to analyze, understand and explain a policy making process at the sub-national level, which is intended to contribute to the sustainability of biofuels development in Peru, under both a global context of climate change and a national context of governmental decentralization. Two conceptual frameworks have been selected for the analysis of the Conciliation Table on Biofuels in Lambayeque as a case study: policy arrangement approach, and governance capacity approach. A complete summary is presented early in the document providing details on the case. I invite you to read it; and if you consider the topic as interesting as I do, I challenge you to continue through the whole document; as you will find useful information for the analysis of similar processes.

The writing of this thesis has been a hard work, but I feel I learned a lot along the entire process. I really enjoyed working on this thesis, not only because I was able meanwhile to spend precious time with my kids and husband; but mainly because I was also able to choose the subject and work with friendly people, not to mention my love for the Northern Peru lands, its great cultural heritage and wonderful food.

During the development of this thesis, I received kind help and support from many people and institutions. First of all, I want to thank the Dutch Ministry of Foreign Affairs for granting me the NUFFIC scholarship to complete my master studies in The Netherlands. In Lambayeque, I want to thank Jose Muró for accepting at once the idea of cooperating with the SNV for their work in the region; my thanks as well to all the members of the regional Conciliation Table for allowing me to participate in their talks and listen to their stories. Finally, to all the really important people committed to pursue a more sustainable development for our country. Go ahead! I want to express my gratitude to all of my teachers and classmates of the MSc. Program Forest and Nature Conservation 2007-2009 for making the program unique. My deepest gratitude to my thesis-supervisors: Marielle van der Zouwen and Marjanke Hoogstraa. Thanks Marielle to believe in my ideas and to support my coming back home with my family, while continuing supervision through Skype. Thanks Marjanke for being very critical; I really appreciate your commitment with my work! Thanks to you for helping me to improve my writing skills. Thanks to my international friends for our lunches and discussions at Gaia building, and thanks to all my new ‘best friends’ in Wageningen, specially my great Greek community. I will miss you all! Last but not least, thanks to my family, because without your love and support, I would have not been able to come to Europe to make my dream true! I adore you.

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LIST OF FIGURES Figure 1. The tetrahedron of the policy arrangement approach Figure 2. The national political context Figure 3. The decentralization involving biofuels Figure 4. Actors and coalitions Figure 5. Actors and interests Figure 6. Congruencies of the indicative governance capacity Figure 7. Indicative governance capacity Figure 8. Conceptual framework proposed

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LIST OF ABBREVIATIONS ANA National Water Authority APRA American Revolutionary Popular Alliance BEFS Bioenergy and Food Security Project BIOPER Biofuels from Peru CAR Regional Environmental Commission CBD Convention on Biological Diversity CES Center of Social Studies Solidarity CFC Common Facilities Fund COBER Congress on Renewable Energy and Biofuels CONAM National Environmental Council CONCYTEC National Council for Science and Technology CTAR Transitional Regional Administration Councils CTB Conciliation Table on Biofuels DED German Service for Social and Technical Co-operation DEVIDA The National Commission for Development and Life without Drugs DGPA Directorate of Agrarian Promotion DRA Regional Agrarian Directorate DREMH Regional Directorate of Energy, Mines and Hydrocarbons DS Supreme Decree ECLAC Economic Commission for Latin American and the Caribbean EIA Environmental Impact Assessment EU European Union FAO Food and Agriculture Organization FUNDER Foundation for Rural Development GCA Governance Capacity Approach GDI General Directorate of Industry GRDE Regional Management of Economic Development GH Green House Gas (GHG) GRLAM Regional Government of Lambayeque GRRN Regional Management of Natural Resources and Environment GTZ German Society for Technical Cooperation HPO Heaven Petroleum Operator IDB Inter American Development Bank IGC Indicative Governance Capacity IMAR Support Institute for Management of Risk Water - North Coast

INDECOPI National Institute for the Defense of Competition and Protection of Intellectual Property

INIA National Institute for Agrarian Research INRENA National Institute of Natural Resources JNUDRP National Board of Users of Irrigation Districts of Peru LOGR Organic Law of Regional Governments MEF Ministry of Economy and Finances MINAG Ministry of Agriculture MINAM Ministry of Environment MINEM Ministry of Energy and Mines MoU Memorandum of Understanding NGO Non Governmental Organization

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NUMES Strategic Plan of Sustainable Energy and Bioenergy in Peru PAA Policy Arrangement Approach PEESB Program for the Development of a New Sustainable Energy Matrix PGC Performative Governance Capacity PROBIOSAM Biofuels Program of San Martin PRODUCE Ministry of Production PUCP Pontific Catholic University of Peru RM Ministerial Resolution SECCI Initiative on Climate Change and Sustainable Energy SENASA National Service of Agrarian Health SNV Netherlands Development Organization SOFA State of Food and Agriculture TLC Free Trade Agreement UN United Nations UNALM National Agrarian University la Molina UNPRG National University Pedro Ruiz Gallo USMP University San Martin de Porras WB World Bank ZEE Ecological Economic Zoning

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TABLE OF CONTENTS

PREFACE…………………………………………………………………………………............ iv LIST OF FIGURES…………………………………………….………………………………… v LIST OF ABBREVIATIONS…………………………………………………………………… vi SUMMARY…………………………………………………………………………………......... x 1. INTRODUCTION…………………………………………………………………………... 12

1.1 Context background………………………………………………………………... 12 1.2 Problem statement………………………………………………………………….. 14 1.3 Research objective and research questions………………………………………. 15 1.4 Thesis outline……………………………………………………………………….. 15

2. THEORETICAL APPROACH……………………………………………………………. 17 2.1 Policy Arrangement Approach (PAA) …………………………………….…… 17

2.1.1 Choosing the PAA…………………………………………………………..… 17 2.1.2 Dimensions of the PAA…………………………………………………….… 19 2.1.3 Political modernization……………………………………………………….. 21

2.2 Governance Capacity Approach (GCA) ……………………………………….. 22 3. METHODOLOGY………………………………………………………………………….. 27

3.1 Research approach…………………………………………………………………. 27 3.2 Data collection…………………………………………………………………….... 28

3.2.1 Literature review……………………………………………………………….. 28 3.2.2 Interviews……………………………………………………………………….. 29 3.2.3 Observations……………………………………………………………………. 30

3.3 Data analysis………………………………………………………………………... 30 3.4 Validity and Reliability …………………………………………………………... 31

3.4.1 Validity………………………………………………………………………….. 31 3.4.2 Reliability……………………………………………………………………….. 33

4. POLITICAL CONTEXT………………………………………………………………….... 34 4.1 National biofuels policy………………………………………………………….... 34

4.1.1 The ministries involved………………………………………………………... 35 4.1.2 The biofuels legal framework…………………………………………………. 36 4.1.3 The biofuels structure in the ministries………………………………………. 37 4.1.4 The international supporters…………………………………………………... 38 4.1.5 The biofuels research…………………………………………………………... 40 4.1.6 Political changes and the biofuels progress…………………………………. 41

4.2 National decentralization policy…………………………………………………... 43 4.2.1 In Lambayeque…………………………………………………………………. 46 4.2.2 Ministry of Energy and Mines………………………………………………... 46 4.2.3 Ministry of Agriculture………………………………………………………... 48 4.2.4 Ministry of Production…………………………………………………….….... 49 4.2.5 Ministry of Environment……………………………………………….….…... 50

5. THE REGIONAL BIOFUELS ARRANGEMENT…………..…………………..…. 52 5.1.1 Actors dimension…………………………………………………………….…. 52 5.1.2 Internal actors…………………………………………………..….………….… 53

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5.1.3 External actors……………………………………………………..………….… 55 5.1.4 Coalitions………………………………………………………………..…….… 57

5.2 Resources and Power dimension……………………………………………..…... 58 5.2.1 Resources constellation………………………………………………………... 58 5.2.2 Power influence……………………………………………………………….... 61

5.3 Rules of the game dimension.…………………………………………………….. 62 5.3.1 Legislation………………………………………………………………………. 62 5.3.2 Procedures………………………………………………………………………. 62 5.3.3 Political Culture……………………………………………………………….... 63

5.4 Discourse dimension………………………………………………………………… 64 6 THE GOVERNANCE CAPACITY OF THE CTB……………………………………… 68

6.1 Indicative governance capacity………………………………………………….… 68 6.1.1 Strategic congruence…………………………………………………………… 69 6.1.2 Internal structural congruence………………………………………………… 70 6.1.3 External structural congruence…………………………………………..….… 73 6.1.4 Overall reflection on governance capacity……………………………….….. 74

7 DISCUSSION……………………………………………………………………………. 76 7.1 Results………………………………………………………………………………... 76 7.2 Theoretical Framework……………………………………………………………. 78 7.3 Methodology………………………………………………………………………… 80

8 CONCLUSIONS………………………………………………………………………… 81 9 RECOMMENDATIONS……………………………………………………………….. 83

9.1 Recommendations for practice…………………………..………………………......83 9.2 Recommendations for science…………………………………………………….........83

REFERENCES…………………………………………………………………………... 85 APPENDICES …………………………………………………………………………... 90

A. Topic list and questionnaires……………………………………………………... 90 B. CTB action plan 2008 and 2009………………………………………………….. 94 C. List of legislature reviewed ………………………………………………………. 96 D. List of participants in CTB meetings 2009…………………………………….. 97 E. List of international agreements reviewed……………………………………... 99 F. List of key actors interviewed…………………………………………………….. 99

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SUMMARY Nowadays, the debate on biofuels as an option to reduce gas emissions is high on the agenda, not only due to the reduction of carbon dioxide, but also because biofuels provide a new form of energy, independency from fossil fuels, new systems of agriculture, economic development, change of land use, and social issues among others. In this context, Peru is also promoting a series of regulations and measures that seek to support the development of biofuels. The first step was done with the establishment of the “Law on the Promotion of Biofuels Market” in August 2003. The biofuels issue is, however, under a very complicated political structure for two main reasons. Firstly, because it crosses four different sectors: Agriculture, Environment, Energy and Production, and secondly because of the decentralization policy process that has taken place in Peru, which has allowed the regional governments to be involved in the biofuels political arena. At this moment, several regional projects on biofuels have been designed and are already being implemented. One of these projects is the Conciliation Table on Biofuels (CTB) in Lambayeque, which was established officially on May 2008 by a group of eleven members from public and private sectors as well as civil society. The CTB tries to develop a sustainable biofuels sector with a social inclusion approach which translates to the inclusion of the rural population into the production chain of energy crops. Despite the fact that the CTB has been working for one year, the progress so far has been very slow and therefore, this study explored the developments of the CTB over this one year time period and the potential for the future. Three main research questions have been studied: 1) what is the political context of biofuels in Peru (i.e. legal framework, institutions involved and levels of government), 2) what are the characteristics of the conciliation table process on biofuels in Lambayeque (participation of actors, creation of coalitions, distribution of power and resources, (in) formal cooperation and the sharing ideas, and 3) to what extent will the CTB be able to develop an adequate biofuels policy. For the analysis of the process, two theoretical frameworks have been selected: the Policy Arrangement Approach (PAA) and the Governance Capacity Approach (GCA). The PAA is mainly an analytical tool describing the four key factors of a policy process called dimensions. The GCA is used for evaluating and prescribing policy-making by the analysis of the PAA dimensions and the coherence among them. The data was collected on the basis of a literature review, 17 semi-structured interviews and observations. The total number of CTB members and the four national key people in charge of biofuels within each ministry involved have been interviewed, together with two external actors who are part of the private sector and the international cooperation in the region. The findings of the case study can be analytically generalized to a theory. Both selected theoretical approaches allow the analysis of each concept identified in the policy arrangement. Future arrangement studies must consider the different dimensions and concepts described in the current research and a multiple case study can be applied to include other regions with similar initiatives like Piura and San Martin in order to compare results and improve the national process. The study shows that Peru has internalized different global discourses of climate change and renewable energies, promoting a national political platform of biofuels in charge of four sectors. Moreover, political modernization in Peru is understood as the decentralization process, the major socio-political shift that allows regional and local governments to be involved in national policy

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processes, for example, biofuels. In fact, the CTB has been established by regional executive resolution and without this national change, the CTB and other similar regional initiatives would not exist, because the current legal framework brings to the regions the faculties to have political participation and decision. Despite the fact that the Ministry of Energy is the only one that has a specific designated unit to be in charge of biofuels and receives significant financial funds from the Inter-American Development Bank to develop the sector of renewable energies, it seems to be losing ground since the last bureau was changed some months ago. This situation gives a window of opportunity for the Ministry of Environment, which can now position itself in the biofuels platform since it will lead the next COBER III. The regional policy arrangement is strongly promoted and supported by a coalition of two main actors between the Netherlands Development Organization (SNV) and the Regional Management of Economic Development (GRDE). Both stakeholders share same interests, funds, knowledge and authority and SNV is the driving force of the CTB and also the main promoter of other regional arrangements like those in Piura and San Martin. The study identified some other players (non CTB members) who are much related to the topic of biofuels regionally, like the academic sector, the local authorities, the water authorities, the international cooperation, the farmers associations, and private sectors. The CTB members recognize the possibility to seek new alliances with external actors who can support them and increase the network. In this sense, the private project of Arena Verde and the German Technical Cooperation (DED) seem to be attractive allies, but coalitions with local governments and local communities are believed to be the way to develop biofuels at a very local level, with rural population. The lack of financial funds and research has been determined as the main issue in supporting the shared discourse of ‘sustainable rural development’ in the region regarding biofuels, which is framed by three different groups of interests: economic, environmental and social. The region does not yet have an official technology package to offer to the market for producing industrially jatropha for biodiesel. The CTB members recognized that the funds are not sufficient enough to do research and they need to mobilize and allocate more financial resources from diverse sources, however, this task is very difficult. It seems that ‘money and research’ are determinant ‘indicators’ for the governance capacity of the regional policy arrangement. Another weak ‘indicator’ is the lack of internal formal rules that determine the duties and responsibilities of each member as well as procedures for the functionality of the ‘table’. Members act according to informal rules framed by a political culture. The case shows that most of the members consider it necessary to have formal internal rules and additionally, some of them seem to be confused about their duties and tasks. The CTB presents an intermediate high level of indicative governance capacity, because nine ‘indicators’ from a total number of 12 are supporting the shared discourse, indicating that the dimensions of the policy arrangement are coherent. There are some determinant ‘indicators’ that should be improved in the short and medium term, otherwise the CTB would not be able to achieve all the objectives. The CTB is not an isolated biofuels regional process; it is embedded in national and global contexts, which provide meaning to its existence. The indicative governance capacity approach was applied to complement the policy arrangement approach for the analysis of the CTB. The use of both theoretical approaches determined the necessity to include explicitly these contexts in the tetrahedron model of the policy arrangement approach.

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1. INTRODUCTION 1.1 CONTEXT BACKGROUND Talking about climate change today is as common as talking about education, health, economy or youth trends. The last decades brought a series of scientific discoveries, like for instance the carbon dioxide greenhouse effect, that led a number of developed countries and other countries under development to take political, economic and technical actions to mitigate climate change and adapt to changes already occurring. In this sense, a new trend to reduce consumption of fossil fuels has been started, resulting in the diversification of the energy matrix for renewable energies. Nowadays, the debate on biofuels as an option to reduce gas emissions is at the top of the agenda. It is not only related to climate change and the reduction of carbon dioxide, but it also evokes a new form of energy, independent from fossil fuels, new systems of agriculture, economic development, change of land use, rural development, social issues and many other concepts. At international level, many organizations, as well as agreements or protocols have something to say about the topic, which are mainly focused on the question: How to develop biofuels in the world with a minimum impact on the earth? Some examples are the European Union (EU) and its Strategy for Biofuels (SEC 2006 - 142), the United Nations (UN) and its report on ‘Sustainable Energy’ (UN-Energy, 2007), the Food and Agriculture Organization (FAO) and its last annual publication State of Food and Agriculture (SOFA 2008), the Roundtable on Sustainable Biofuels and its ‘Version Zero’, the World Bank's 2008 World Development Report, Agriculture for Development, the Inter-American Development Bank (IDB) and its scored card, as well as the Convention on Biodiversity, the Kyoto Protocol, and other international agreements. Since the year 2000, Peru considered as a developing country, is also promoting a series of regulations and measures that seek to support this global initiative in order to reduce global warming. It is in this context that in August 2003, during the government of President Alejandro Toledo, the new Law No. 28054 “Law on the Promotion of Biofuels Market” was officially enacted (El Peruano, 2008). This law provides the overall framework to promote the development of biofuels markets, based on self competition and free access to economic activities, in order to diversify the fuel market, promote agricultural development and agro-industry, generate employment, reduce environmental pollution and offer an alternative market in the Fight Against Drugs. After the biofuels law was passed, a Technical Committee was established for proposing and recommending standards and additional provisions to enforce the law. In May 2004, the Commission submitted a final report, which defines certain technical specifications on the use of biofuels (CONAM, 2008). In 2005, the Regulation of the Law 28054 was published (DS 013-2005-MEM) setting the percentage of mixtures of ethanol and diesel. In 2007, the Regulation for the Commercialization of Biofuels (DS 021-2007-EM) was created, establishing the compulsory use of B2 diesel, gasohol and B5 diesel by 2009, 2010 and 2011, respectively. According to the law and regulations, biofuels are defined as chemical products that are obtained from raw materials of agricultural origin, agribusiness or other form of biomass that meet the quality standards established by competent authorities for use as fuel. Two distinct types of biofuels have been defined, due to the national crops production: bioethanol and biodiesel. Bioethanol is ethyl alcohol (CH3-CH2-OH) characterized by liquid compost, colorless, volatile, flammable and

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soluble water. For the purposes of Peruvian regulations, it is understood as the alcohol obtained from sugar cane, sorghum, maize, cassava, potato, rice and other agricultural crops. Biodiesel is a mixture of esters (according to alcohol use) of saturated acids and different unsaturated fatty molecular masses from the trans-esterification of oils and fats of vegetable origin, is meant as a substance derived from oilseed of oil palm, Jatropha curcas (jatropha), higuerilla, soybean, sunflower and other vegetable oils. In May 2007, the Ministries of Energy and Mines (MINEM), Production (PRODUCE) and Agriculture (MINAG) successfully organized the First Congress on Renewable Energy and Biofuels (COBER I) in Lima, which involved major public institutions, private sector, technical cooperation agencies and international cooperation. After COBER I, the MINEM organized two workshops with the purpose of creating a Strategic Plan for Renewable Energy and Biofuels for the country. In May 2008, the Inter-American Development Bank (IDB) approved the technical cooperation for the preparation of this plan, with funding from its initiative on Climate Change and Sustainable Energy (SECCI). In April 2008, the Division of Natural Resources and Infrastructure of Economic Commission for Latin American and the Caribbean (ECLAC) submitted to the authorities and representatives of public and private sector the proposal “Table Command for the Advancement of Biofuels in Peru”, which seeks the convergence and the alignment within public policies on biofuels. In October 2008, the COBER II took place in Lima with great success, and each sector presented some of their internal policies as well as other national and international public and private initiatives. Until that moment, the Peruvian Government -as the national authority- did not have a national biofuels policy, and it is still working on it. After the COBER II, the Ministry of Agriculture organized a workshop in Lima to establish sustainable criteria for the development of biofuels, inviting representatives of the IDB, the Roundtable on Sustainable Biofuels, the German Society for Technical Cooperation (GTZ), the German Development Service (DED) as well as related companies to develop projects on the field. Nowadays, the MINAG has developed a proposal of Policy Guiding for the development of crops for energy in Peru. Due to these advances, the private sector and the farmers' associations have now the opportunity to produce ethanol from sugar cane and biodiesel from palm oil and Jatropha. Given the growing energy demand and the global trend to decrease the dependence on fossil fuels and reduce emissions of greenhouse gases, the domestic market currently has a strategic position. It has the possibility to develop in various sectors and fields, which might result in a high potential to compete with markets like Brazil and Colombia that are very advanced in terms of biofuels. In that context, Peruvian Government had promoted a technical-political national platform where it is possible to discuss, encourage, and assess all issues related to biofuels in Peru. The overall approach and the legal biofuels framework demand from all levels of government to incorporate the theme into their activities. This framework fits in the decentralization process of the country that began at the end of the 80s, but was institutionalized in 2002 with the Law on Basis of Decentralization by President Alejandro Toledo. In this context of decentralization and participation, some Regional Governments are currently working on biofuels issues. For example, the San Martin regional government in the Amazon region has created a biofuels program called PROBIOSAM, which is being supported by the Netherlands Development Organization (SNV) and other stakeholders. Some regions at the North Coast of Peru are also working on biofuels,

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especially Lambayeque and Piura. In May 2008, Lambayeque created a Conciliation Table on Biofuels (CTB), which is formed by eleven members from the public and private sector and civil society. The CTB has defined by Law some guidelines for the development of biofuels to be implemented during the next years with the participation of all the actors involved in this matter. Piura has recently created a Technical Table on Biofuels, also formed by members from public and private sectors (Andina, 2009). 1.2 PROBLEM STATEMENT The fact that the topic of biofuels has received considerable attention in the regions of the North of Peru is that, this area is the best region to develop ethanol from sugar cane, because of its warm and dry weather (22ºC). As a consequence of this the performance of the sugar crop is very high. Additionally, in this region there are still large territories (from 10,000 up to 400,000 hectares) owned by peasant communities. This fact is an important condition to attract new investments. Most of these lands are deserts and local people do not have the funds to transform them into agriculture land, resulting in the necessity to sell or lease their properties to foreign (inter)national investors. The Conciliation Table on Biofuels (CTB) in Lambayeque is one, among others, the very first regional effort to contribute to the sustainable development on biofuels. In Lambayeque, Jatropha carcus (jatropha) is seen as the largest potential crop to produce vegetable oil and biodiesel in the region. However, this region is confronted with serious problems such as water scarcity, land property, loss of biodiversity, social exclusion, unequal distribution of benefits, among others; most of them are trying to be solved by the Ministries of Agriculture and Environment. Private projects argue that these lands are eroded and no one ever used them before, so they can make deserts become green, creating local employment and contributing to the development of national economy. In other words, biofuels would not only be for the economic development of the region, but they also offer to the market a new friendly environmental energy alternative. Although the CTB is trying to formulate its own policies on biofuels as well as other Lines of Intervention, it seems that until now it does not make substantial progress in achieving their initial objectives, which are: - to encourage the development of research in energy crops and biofuels production, - to articulate the institutional and professional capacities, - to propose standards for the regional development of biofuels linked to domestic policies, - to propose the Regional Program of Biofuels, - to help guiding private investment, and - to exchange information on funding opportunities. Despite the fact that the CTB has been working for only one year, the progress so far has been very slow and therefore this study explored the developments of the CTB over this one year time period and the potential for the future. The study focused on the structure and organization of the regional biofuels policy arrangement, considering the current political context of Peru after the major socio-political shift of decentralization. The research analyzes the actors, their power and resources, the rules of their games, the discourses they handle and the legal framework; everything is framed by

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the Policy Arrangement Approach and the Indicative Governance Capacity. The study is the first on this type of initiatives involving the development of biofuels at regional level. 1.3 RESEARCH OBJECTIVE AND RESEARCH QUESTIONS The objective of study is therefore to explain why the regional Conciliation Table process in Lambayeque progresses very slowly in the context of decentralization and participation, exploring the structure and organization of the CTB in order to formulate recommendations to improve the process. The following research questions are posted to guide the study achieving its objective; there are three main questions, each one divided in three or four sub questions. I. What is the political context of Biofuels in Peru?

1.1 What is the legal framework on biofuels in Peru? 1.2 Which institutions are involved with biofuels policies? 1.3 How is the relation between central and regional governments in the field of biofuels?

II. What are the characteristics of the Conciliation Table process on Biofuels in

Lambayeque?

2.1 Who are the actors participating in the process and which coalitions have they formed? 2.2 Who has the power to mobilize and distribute the available resources and who does determine

policy outcomes and how? 2.3 How do actors cooperate formally and informally within the Conciliation Table on Biofuels? 2.4 What ideas do the actors share or not?

III. To what extent will the Conciliation Table on Biofuels process be able to develop an

adequate biofuels policy?

3.1 To what extent is it likely that the actors involved share the same ideas? 3.2 To what extent is there any coherence in the Conciliation Table’s process? 3.3 To what extent is the Conciliation Table’s process embedded in the socio-political context of

decentralization and participation and in (inter)national biofuels policies? 1.4 THESIS OUTLINE The present thesis is conformed by nine chapters, including the introduction, theoretical approaches, research methodology, results, discussions, conclusions and recommendations. The introduction illustrates an overview of biofuels context in Peru, and presents the problem statement, the main objective and the research questions. Two theoretical frameworks are explained in the second chapter, which are used for the analysis of the current study: Policy Arrangement Approach and the Indicative Governance Capacity Approach; the concept of political modernization is also reviewed during this chapter. The third chapter describes the research methodology, including the

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case study as the research approach. Illustration of data collection and data analysis is also part of this chapter. Main findings of the study are presented in section four, five and six, following the structure of the three main research questions. Chapter four describes the political context of biofuels in Peru, considering the decentralization process. Chapter five exemplifies the characteristics of the regional Conciliation Table on Biofuels in Lambayeque, considering the actors and coalitions, resources and power, rules of game, and discourses. Chapter six relates the elements of the CTB to the concept of congruency in order to show if the regional process is able to develop and adequate regional biofuels policy. Different points from the results are discussed in chapter seven; in addition, some theoretical and methodological discussion can also be found there. Chapter eight draws some conclusions, and in chapter nine, some recommendations for the process are provided.

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2. THEORETICAL APPROACHES For the purpose of this study, two theoretical approaches are used: the Policy Arrangement Approach (PAA) together with the Governance Capacity Approach (GCA). Both will help to describe, analyze and understand the functioning of the Conciliation Table on Biofuels (CTB) in Lambayeque, as a regional environmental policy process in Peru. Therefore, the chapter is divided into two sections, which explain both theoretical approaches. The first section presents the four dimensions of the PAA and links the arrangement with the political modernization concept. The second part is focus on the institutional perspective of the Governance Capacity (IGC). 2.1 POLICY ARRANGEMENT APPROACH 2.1.1 CHOOSING THE POLICY ARRANGEMENT APPROACH During the last decades, in order to understand, explain and foresee policy process and policy changes in environmental domain, scientists have formulated different theoretical approaches. At the end of the 90’s, the Policy Arrangement Approach (PAA) stems with the criticism of some of those theoretical approaches that refer to actors’ interactions for the analysis of the policy processes, because there were sometimes too actor-oriented, or too organizational, or simply ignoring the power games. Several ‘meso level’ theories are available to this end (Liefferink, 2006). For the New Institutionalization, people interact because they are part of institutions; it was a political approach that takes into consideration informal rules of political domain, and formal and organizational structures. The approach seeks to assess theoretical models of how institutions influence individuals and how institutions interact with them. However, the approach fails to understand the rise and decline of institutions (Lowndes, 2002). Multiple Streams is used for the analysis of policy process under high ambiguity, especially for the agenda setting. This approach considers the existence of three political streams (politics, policy and problem) with their own dynamics. Actors interact mainly within a stream, but interactions among the streams are uncommon. The approach helps to understand policy processes framed by the independence of problems and solutions. However, this approach does not consider the interactions among streams, ignoring past and future periods (Zahariadis, 1999). For the Policy Networks, there is a strong dependency among actors, based on the mobilization and allocation of their resources in a policy domain. Interactions among actors can be formal and informal (Rhodes, 1997). Although the network approach helps to understand environmental policy in a complex context, it has been criticized in that the term is often applied to any kind of group, mainly provides description rather than explanation, ignores the changes of networks, and fails to determine the boundary of analysis (Rhodes, 1997; Dowdling, 1995, cited in Keast and Brown, 2005). For the Discourse Analysis agents interact because they share storylines; it aims to understand why an environmental problem definition is dominant in certain moment under certain conditions over others definitions, taking into account different perceptions about problems and solutions, as well as institutional boundaries. However, this approach has no power to predict and fails to draw causal explanations, being weak for generalization (Hajer, 1995).

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Although these approaches mentioned before are very useful to understand policy process and changes, they miss to integrate all the different factors existed in such processes, as for instance the external context. The PAA seeks for policy processes triggered by major social political shifts and decisions of actors to do things differently as consequence of discourses. The CTB at a regional level is strongly framed by decentralization national process in the country, which was a major socio-political shift. Representatives of PAA reflected on how to analyze day-to-day policy processes, being an umbrella for other actor’s approaches but including substance and context into account, because policy arrangements are the consequences of the interaction of structural political and social changes and the renewal of policy making by agents in daily practices (Arts and Van Tatenhove, 2004). These daily interactions between actors can gradually develop stable patterns, which may include the substantive definition of the problem and its possible solutions, but also the processes between the actors and the formal and informal rules that take place (Liefferink, D., 2006). New actors from public and private sector as well as civil society share same ideas of development biofuels sustainable; therefore, the CTB was officially recognized as a new regional policy arrangement for the first time in biofuels arena. The Policy Arrangement Approach is defined as (Arts et al. 2000: 54):

“The temporary stabilization of the organization and substance of a policy domain at a specific level of policy making”.

The relationship between state, market and civil society is reflected in the organization of a policy arrangement, for instance in the actors involved, the distribution of resources, or the rules leading the arrangement (Arts and Van Tatenhove, 2004 cited in Liefferink, 2006). In this sense, the CTB is considered as a given policy arrangement with a number of members and non-members involved, with different type of resources, and with internal and external rules governing the arrangement. Moreover, a policy arrangement does not exist without substance like principles and objectives or without organization like units, tools, procedures, responsibilities and skills (Arts and Van Tatenhove, 2004). Consequently, the regional policy arrangement in this study is defined as the temporary stabilization of the organization and substance of the Conciliation Table on Biofuels in Lambayeque. The PAA allows understanding how the regional biofuel policy process is structured, organized, contextualized and supported. PAA includes the four key factors of policy processes, called the four dimensions, becoming a broad model for the analysis of such processes (Liefferink, 2006). The approach offers a good basis for an encompassing and dynamic analysis of policy processes, more than other theories focused on one or two of those dimensions (Liefferink, 2006). These dimensions are (1) actors and coalitions, (2) rules of the game, (3) resources and power, and (4) discourses; all of which are framing the arrangement, being symbolized by the tetrahedron (see next figure 1), in which each of the corners represents one dimension (Arts et al. 2006). The PAA considers continuity and change overtime as the result of changes in rules, resources and discourses among actors involved (Liefferink, 2006). Any change on one dimension, induces a change on the other dimensions (Arts et al., 2006), but it make sense only if all dimensions are interconnected (Liefferink, 2006). Since CTB is considered as a regional policy arrangement, the PAA can describe the relations among the dimensions and how the changes on one dimension can

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alter the dynamic of the others. For example, the appearance of a new actor in the CTB might allocate new resources for the group activities; therefore, a change on resources can vary the power influence, promoting a new coalition inside the CTB. Figure 1: The tetrahedron of the PAA (Arts et al., 2006) The policy arrangement can be analyzed taking each of the four corners of the tetrahedron as starting point, allowing four analytical perspectives that will depend on the objective of the analysis. Each perspective highlights different aspects of the arrangement; for instance, it is possible to start the analysis from a change in coalitions or from amended rules of the game (Liefferink, 2006). For the case of the CTB, the analytical perspective is focusing on the actor´s dimension. Despite the fact that the National Law on Promotion of Biofuels Markets provides the framework to develop biofuels nationwide, the CTB in Lambayeque exists because of the interests of some actors in developing biofuels sustainable in the region. Hajer (1995: 45) pointed out that a “law comes out to be a particularly well institutionalized discourse”. This is the case of the CTB, where actors played a main role in institutionalizing the biofuel-shared discourse into the Regional Executive Resolution that established officially the CTB in May, 2008. Moreover, the PAA takes into consideration the external context of the arrangement, relating actors to institutional dynamics as well as policy making to macro-political change (Phung, 2008). For instance, a change in the national biofuels policies, no matter which sector, will produce a change on the regional arrangement, since regional policies are embedded into national policies. 2.1.2 DIMENSION OF THE PAA This section describes the four dimensions of the PAA and relates them to the regional CTB process. In this sense, each dimension has been operationalized for the analysis, selecting criteria or -better saying- empirical assets, which can be immediately observed from the policy process (Wierin and Arts, 2006). For the purpose of the study, these criteria or assets have been called ‘indicators’, as well as Wiering and Arts (2006) used this terminology to analyze institutional changes empirically in the case of the policy arrangement approach used in the Dutch river management process.

Discourses Rules of the Game

Actors

Resources and Power

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Actors and Coalitions This dimension is operationalized as the actor constellation and the coalitions among actors. An actor constellation is a formation of interrelated organizations, groups, networks, or even influential individuals, relevant for a basic service/value chain that together constitute a “system” (SNV, 2008). For the purpose of the study, actors’ constellation can be defined as the biofuels political arena, where key persons and institutions participate directly or indirectly, affecting the biofuel policy area. These actors can be both governmental and non-governmental. Coalitions “consist of a number of players who share resources and/or interpretations of a policy discourse in the context of the rules of the game” (Arts and Van Tatenhove, 2004: 342). Therefore, coalitions seek to achieve the identified similar policy goals, supporting or challenging the dominant policy discourse or rules of the game (Arts and Van Tatenhove, 2004). The CTB coalitions are consequences of changing interaction patterns among the actors, because of the distribution of resources and powers. Rules of the game The rules of the game are all the rules that actors should follow. “In general, actors constantly draw upon rules that provide them with guidelines to act properly and legitimately” (Arts and Van Tatenhove, 2004: 342). There are formal and informal rules that can be operationalized by ‘indicators’ like a) legislation, b) procedures and c) political culture (Giddens, 1984; Rittberger, 1993, cited in Wiersing and Arts, 2006). Legislation is seen as the institutionalization of the discourses, which is considered as a formal rule. For instance, a law is created when political actors who influence the agenda setting share same ideas and discourses. The procedures are the formal rules of the game per se; how do these actors interact in terms of tasks, responsibilities, leading, participation and decision-making? There are also informal rules that correspond to a political culture. Actors interact to achieve same objectives, but not always they follow formal rules; in that sense, there is a culture within rules understood by the actors, following their instincts and interests (Arts and Van Tatenhove, 2004). The rules of the game of the CTB are operationalized according to the mentioned ‘indicators’. Both formal and informal rules set the boundaries to the actors to achieve outcomes; therefore, they are both constraining and enabling (Buizer, 2008). Actors of a formal policy arrangement may have developed practices to deal with matters not (yet) formally agreed, because they want just to facilitate formal processes of agenda setting, decision making or implementation (Van Tatenhove et al., 2006). Political culture is the set of narratives and symbolic practices, by which competing claims are made by individuals or groups in any society to articulate, negotiate, implement, and enforce (Baker 1990, cited in Olick and Omeltchenko, n.d.). Resources and Power Resources are defined as the assets that actors have or can mobilize in a process, allowing them to exercise power. For this study, three indicators under the umbrella of resource constellation

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operationalize the resources: authority, financial funds, and knowledge and technology (Wiering and Arts, 2006). Power means mobilization, division and use of the available resources. It will be operationalized by the power influence, which is used by actors to guide the dynamic of a process in order to achieve their objectives (Wiering and Arts, 2006). Actors who have control over the compilation and allocation of resources may influence the outcomes more than those who do not have such control (Buizer, 2008). For Emerson (1962), power is a property of the social relation; it is not an attribute of the actor (Emerson, 1962, cited in Chaves, 2008). In that sense, one actor has no power by itself, the actor should be embedded in a context with a kind of political authority, or some financial resources, or at least with the knowledge to develop biofuels in the region. This context might make him powerful. Arts and Van Tatenhove (2004: 347) made a very detailed analysis of the several concepts of power, defining it as follow:

“Power is the organizational and discursive capacity of agencies, either in competition with one another or jointly, to achieve outcomes in social practices, a capacity which is however co-determined by the structural power of those social institutions in which these agencies are embedded”.

Discourse The policy arrangement approach subscribes to Hajer’s (1995) definition of discourse, which implies that discourse and practices are intertwined: there is a meaning in all practices. In Hajer’s (1995: 44) definition, discourse is:

“A specific ensemble of ideas, concepts, and categorizations that are produced, reproduced and transformed in a particular set of practices and through which meaning is given to physical and social realities”.

Based on this definition, Arts and Van Tatenhove (2004:343) defined policy discourses as:

“Dominant interpretative schemes, ranging from formal policy concepts to popular story lines, by which meaning is given to a policy domain”.

Biofuels are considered as a phenomenon, where many actors are dealing with this issue from an economic, environmental, and social point of views at an international and national level, as well as at regional and local level. These different points of view translate into discourses. Analyzing the discourses is necessary to figure out “how a particular framing of the discussion makes certain elements appear as fixed or appropriate while other elements appear problematic” (Hajer, 1995: 54). 2.1.3 POLITICAL MODERNISATION Arrangements are under pressure of constant change by processes of political modernization (Van Tatenhove et al., 2000, cited in Liefferink, 2006). As described above, the external context is very important to take into account the analysis of the policies process, being the political national context determinant for framing the CTB.

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Political Modernization refers to the structural process of changing interrelations between the institutions of state, market and civil society in political domains within countries and beyond, implying new conceptions and practices of governance (Arts and Van Tatenhoven, 2004; Arts et al. 2006). Governance is the exercise of political authority and the allocation and mobilization of institutional resources to solve and management society's problems and affairs (World Bank, 2008). Political modernization evolves political and social shifts in societies. In Peru, the renewal of government was expected through decentralization and participation processes, with the inclusion of important privatization processes. Decentralization brought reforms in political administrative of central, regional and local actors, new procedures and new power relations (Dang Thi Kim Phung, 2008). Peru is trying to decentralize the country for over 30 years and the current government is enhancing the process giving many instruments to the existing 25 regions. Political modernization in Peru is seen from the perspective of National Biofuel Policies, and Decentralization and Participation Policy, which are part of the political national context. Analyzing the changes therein these two national policy processes, it is possible to see if the regional policies fit or not into national policies and to what extent these two levels of government (national and regional) share the same discourses, coordinate, work and define policies jointly. Decentralization has been declared a national policy that involves the whole State giving to the regional governments the responsibility to improve their regions, following national policies but executing own budgets and own action plans. Political modernization has been linked to the policy arrangement approach with the purpose to include the context into account (Arts and Leroy, 2006). The Decentralization in Peru is considered a process of political modernization and it is strongly linked to the policy arrangement of the CTB, because this major socio-political shift permitted the creation of regional governments nationwide. 2.2 GOVERNANCE CAPACITY APPROACH (GCA) The policy arrangements approach is mainly an analytical tool, very suitable to describe, understand, and explain political practices from a specific perspective, but it lacks of instruments to evaluate and prescribe policy-making. In this sense, Arts and Goverde (2006) designed the Reflexive Evaluation by linking the Governance Capacity Approach to the policy arrangements approach, “providing various normative criteria to assess the governance capacity of new modes of governance vis-à-vis the older forms of governments by evaluating their legal, political and economic qualities” (Arts and Goverde, 2006: 69). The new Reflexive evaluation model for evaluating policies is built on one of the three evaluation’s models from Abma (2001, cited in Arts and Goverde, 2006), called ‘judgment’ model (multiple-criteria evaluation). The Reflexive evaluation assumes that a) actors are able to reflect on social practices and can decide whether they plan or not to maintain them, b) structural agencies are shaped by stable social institutions, and c) most policy making takes place in a dynamic context encompassing uncertainty and value dissent (Arts and Goverde, 2006). In other words, agents can make a difference in a complex society and preferences for change do not evolve very easy (Arts &

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Goverde, 2006). The authors also integrated the concept of congruence from Boonstra (2004, cited in Arts and Goverde, 2006) to provide a more complete evaluative tool in policy analysis; this concept is illustrated latter. For better comprehension and understanding of the approach, the concept of governance has to be first described, which is a very complex and not a new term, but has been progressively redefined through the years, focusing in particular on the transformation from government into what is called now, governance (ESPON, 2004). However, governance refers to public actions and organizational structures that are to a degree opposed to the idea of government itself (Rhodes, 1997 cited in Espon, 2004). According to Painter and Goodwin (1995 cited in ESPON, 2004), Government occurs when in the policy process there is a dominant state with formal and hierarchical agencies and bureaucratic procedures; while governance refers to the emergence of “new actors” external to the political arena, evolving complex relationships. According to Leroy and Arts (2006: 12), Governance refers to:

“The fact that steering no longer is the privilege of governmental agencies, but is de facto (and in many cases also de jure) the common responsibility of a variety of agencies, representing governmental bodies, market agencies and civil society organizations”.

Governance takes place when public institutions, market and civil society share decision-making competencies. In that moment, several changes occur: decrease of the central rule making approach, appearance of more open multi-level policy arrangements and more flexible forms of partnership, involvement of non-governmental actors, emergence of local/regional forms of governance, and new actors’ coalitions appear that have the capacity to change the rules of the game (Arts et al., 2006; ESPON, 2004). Based on the definition and characteristics of governance, the Conciliation Table on Biofuels in Lambayeque is considered as a form of governance, because it was officially institutionalized by law, and it has been formed by actors from public and private sector and civil society, including an international NGO. They share decision-making competencies about the development of biofuels in Lambayeque region, and the process is lead by a first-floor state body within the Regional Government. Governance involves also working across boundaries within the public sector as well as between the public, private and community sectors (ESPON, 2004). The CTB works crossing boundaries because of the nature of its actors; it is a combination of public, private and civil actors. Moreover, there are also external regional actors that might influence the outcomes of the CTB, as rural communities concerned to a biofuel project in the region. Governance operates at different levels, involving different processes. Looking for governance in a process-perspective is required because governance is more about interactions among structures rather than structures (Piers and Peters, 2000). The state relations are the starting point to understand the full context of governance and its effects on structures and processes of power and control (Piers and Peters, 2000). The capacity to govern depends on “effective co-ordination of interdependent forces within and beyond the state” (Jessop, 1997: 96 cited in ESPON, 2004). “The capacity of the state, which is a function

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of its organizational coherence and expertise, is also a significant determinant of its success in performing policy functions” (Howlet and Ramesh, 2003: 61). Governance Capacity has been defined by Nelissen et al. (2000 cited in Arts and Goverde, 2006) as:

“The extent to which new forms of governance are able to successfully diminish or solve societal and administrative problems”.

Arts and Goverde (2006) posed a broad definition of Governance Capacity, interpreting it as the result of efforts of public and private stakeholders who hold certain (different) discourses, operated under both formal and informal institutions and employed certain availability of resources. As a result, the quality of the functioning of a specific policy arrangement determines the governance capacity of an organization, a network of actors or a sector. The CTB fits perfectly in this last definition. The Governance Capacity Approach (GCA) is defined by the reflexive evaluation as Indicative Governance Capacity and Performative Governance Capacity. For the purpose of the study, the Indicative Governance Capacity is applied to the case, which is referred to as evaluation at institutional level and to the potential governance capacity of policy arrangements (Arts and Goverde, 2006). It is very soon to evaluate the performance of the CTB, because it has only one year of creation. However, Performative Governance Capacity is described for understanding what should be the next step to evaluate the CTB. Performative Governance Capacity (PGC) is related to “the performance of new modes of governance in those practices that are meant to solve these societal or administrative problems” (Arts and Goverde, 2006: 76). However, the success of governance mainly depends on how actors involved define, perceive and strategize for this success with their own logics of actions. PGC therefore is reflected mostly from a strategic perspective of the approach (Arts and Goverde, 2006). This analysis is referred to as strategic evaluation. Phung (2008) used this approach in the study of two national forest programs in Vietnam, where the performative governance has been assessed by ‘concepts’ like legitimacy and effectiveness, operationalized by local support, goal achievement and money well spent. Indicative Governance Capacity (IGC) refers to “potentials of new modes of governance to contribute to the solution of societal or administrative problems, which are legitimately recognized by the stakeholders” (Arts and Goverde, 2006: 75). It reflects a “capacity to govern” in terms of sufficient available resources, involvement of key actors, enabling rules of the game for appropriate (change) behavior and shared dominant policy discourses. As indicated before, the concept of congruence was integrated to this type of capacity to refine the evaluative tool to cover the institutional aspects of policy evaluation and design (Boonstra, 2004; Grin et al. 2004 cited in Phung, 2008). The Indicative Governance Capacity Approach plays a main role assessing the dimensions of the PAA in order to seek for congruence among them. Congruence means ‘sufficient coherence’ among a) different actors’ policy views, b) the policy arrangement dimensions, and c) the policy arrangement framed by its wider institutional context.

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Congruence should also include flexibility allowing policy actors and social institutions to be able to accommodate changes of people’s preferences, social institutions and structural processes (Arts and Goverde, 2006). Using the institutional perspective, it might be known how (new) modes of governance as the CTB will probably influence the institutional arrangements of policy-making. This influence will result in a certain capacity to produce expected ‘policy successes’ in the foreseeable future (Arts and Goverde, 2006). Boonstra’s definition was adapted by Arts and Goverde (Boonstra, 2004; Arts and Goverde, 2006), defining three equal conditions for the institutional perspective analysis, which are:

a) Strategic congruency, based on the structuration of making decisions and capability of the actors involved to share policy discourses and common interests to give a reasonable meaning to the issues that are taking into account,

b) Structural internal congruency, which happens when the four dimensions of the arrangement have been integrated and adapted jointly, in other words, to which extent the dimensions of a policy arrangement are coherent.

c) Structural external congruency, when the policy arrangement as a whole fits into the wider institutional context.

For the purpose of the study, the indicative governance capacity of the CTB will be evaluated as Arts and Goverde (2006) proposed, in order to see if the structural design of the regional policy arrangement is the appropriate to expect a ‘capacity to govern’ in the near future. That means, that the “different dimensions of a policy arrangement do not contradict too much each other” (Arts and Goverde, 2006: 80). For instance, the external congruence determines coherence between the structure of the regional policy arrangement and the rules of the democratic constitutional Peruvian state, while the internal congruence sees if the four dimensions of the PAA are well integrated, if there is coherence among them and if they support each other. In order to operationalize the concept of congruency to evaluate the policy arrangement of the CTB institutionally, a conceptual framework is proposed for the study. The same ‘indicators’ selected for the analysis of the dimensions of the policy arrangement (see 2.1.2) will be used to determine the IGC of the CTB:

a) The strategic congruence is based on the degree of support from the involved regional actors to the common shared discourse among them. To what extent are actors sharing same policy discourse and common interests on biofuels? The ‘indicator’ here will be the actors’ constellation sharing and supporting a same shared discourse.

b) The structural-internal congruence is determined by how the dimensions are supporting the shared discourse; indicators like actors’ coalitions, rules of the game (formal and informal), and resources like funds, authority, and knowledge will be assessed in order to see if they are supporting the shared discourse.

d) The structural-external congruence is defined by the coherency among legislations: international, national, and other legislations related to biofuel policies. Does the entire legal framework support the shared discourse? Does the regional arrangement fit into it?

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When structural congruence has been achieved, stabilization of the policy arrangement will take place (Boonstra, 2004). A high governance capacity of any policy arrangement could only be achieved with ‘a certain level’ of strategic and structural (internal and external) congruence and, in contrast, that a lack of congruence implies governance failure (Arts and Goverde, 2006). Therefore, the approach used for the current analysis of the CTB will allow the researcher to set this ‘certain level’ based on the qualitative analysis of the ‘indicators’ in order to determine if the CTB has a high, medium or low indicative governance capacity. With this information, the CTB should work to enhance the weak points (if they are) of the process in order to guarantee, for instance, legitimacy and effectiveness.

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3. RESEARCH METHODOLOGY The research methodology is a crucial part of this thesis to answer the research questions. The methodology is very important because it is the phase of the research that determines how the initial questions of the study (research questions) will be linked with all the data collected. But understanding the methodology as the way to design the research, it is not only about data collection and data analysis; it is also about what is going to be done after the data have been collected and processed. “The research design is the logical sequence that connects the empirical data to the study’s initial questions and ultimately to its conclusions” (Yin R., 2004: 20). The quality of the data gathered will depend on a number of factors and the skill of the researcher lies in the ability to take care of the factors that could affect the quality of the data (Kumar, 2005). The current research of the regional policy arrangement is considered as a qualitative research, because of its political science, where organizational and managerial processes of real-life events will be assessed (Yin, 1984). There are identified more than 40 unique approaches to qualitative research methods (Tesch, 1990 cited in Russell and Gregory, 2003), which arises from different disciplines and are influenced by theoretical perspectives within those disciplines (Kirk and Miller, 1986 cited in Russell and Gregory, 2003). The following chapter explains what kind of research methodology has been used for the study, including the methods of collecting and analyzing the data of the regional biofuels policy arrangement. The research is based on a case study approach, the data collection consists on semi-structured interviews, and the data analysis is made by coding the information obtained from those interviews. Additionally, literature review was done as well as observations. 3.1 RESEARCH APPROACH The research has been conducted through a case study approach. According to Yin (1984), a case study is one of the several ways of doing social science research, investigating an empirical topic by following a set of pre-specified procedures. Miles and Huberman (1994:25) mentioned that “a case study is a phenomenon of some sort occurring in a bounded context”. The Conciliation Table on Biofuels (CTB) in Lambayeque is the case study selected, defined as a social unit to understand and explain the organization and process of a regional biofuels policy arrangement in the current political context of Peru after the major socio-political shift of decentralization. A case study approach is preferred when ‘how’ and ‘why’ questions are developed for the research, when there is little control over the events and when the focus is on a contemporary phenomenon with some real life context (Yin, 1994). However, there are also “who”, “where” and “what” questions that can also arise out of case studies. The case of the CTB presents these features since the main objective posed a “why” main research question, following by several “how” questions. This results in an explorative and explanatory case study, because the case is embedded in a national context that should first be explored by “what” questions in order to achieve the objective of understanding “why” the process of developing sustainable biofuels in Lambayeque seems not to have substantial progress. The study will explore in order to explain. The case study approach enables to explore in detail the completely political process, investigating and analyzing different

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elements, concepts and dimensions that can influence the outcomes of the CTB. “Explanatory case studies deal with operational links needing to be traced over time rather than mere frequencies or incidences” (Yin, 1984: 18). Explanatory case studies seek to link an event with its effects and are suitable for investigating causality (Yin, 2003). Additionally, it is important to take into account that there is a common concern about case studies, because they provide very little basis for scientific generalization. However, case studies are generalizable to theoretical propositions and not to populations or universes; the use of theory helps to design the research and the data collection but also it is the main vehicle for generalizing the results (Yin, 1984). The CTB is a case study that might be generalized since it is based on theoretical propositions. The policy arrangement (PA) and the governance capacity (GC) approaches are shaping the research design, but also these approaches consider certain concepts and indicators as theoretical frameworks that will lead the results to be generalized, analytically (Yin, 2003). 3.2 DATA COLLECTION Collecting data is a very important phase of methodology research, because it is the stage, in which the researcher compiles all the information required for his study. These data collections are the basis for the results and inferences that the researcher can make about the study. Without the data, the research questions cannot be answered. A common question during the research design is always made: how to collect the data required for the study. There are several methods to gather valuable information; but in order to choose one or more methods, it is important to keep in mind what kind of data is necessary to answer the research questions. The data collection process for case studies is more complex than in other research strategies. In experiments, the researcher can manipulate behavior directly, precisely and systematically, while in surveys the questionnaire can be structured very well; both allow the researcher to make statistical inferences. In a case study, the investigator cannot control behaviors; he must follow certain formal procedures to guarantee the quality control during the data collection (Yin, 2003). For this case, the researcher tried to follow the three principles that have been described by Yin (2003): a) to use multiple sources of evidence giving to the conclusions the condition of accuracy, b) to create a database where all the compiled data is organized and documented, and c) to maintain a chain of evidence allowing the reader to follow the derivation of any proof from research questions to conclusions. For the current research, three different types of collecting data were selected: a) literature review; b) interviews and c) observations. All three are described below. 3.2.1 LITERATURE REVIEW The literature review is an integral part of the entire research process and makes a valuable contribution to almost every operational step, enhancing and consolidating the knowledge base in order to integrate the findings with the existing body of knowledge (Kumar, 2005). For Poate and Daplyn (1993), literature review is considered as a secondary source, because the information compiled by someone else may not refer to the same concepts and definitions as might be needed for the study; however, such information may still provide part of the data required. On the other

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hand, Yin (1984) believes that documents play a specific and important role in collecting data for case studies because of their overall value used to prove and enhance evidence from other sources; inferences are also possible to be made from literature review. For the present research, the literature review was very crucial in order to acquire more knowledge about the topic of biofuels in Peru. Different kinds of documents were used for this phase, taking several weeks to review them. Documents reviewed include: − The legal framework (legislations, Resolutions, Decrees, Regulations, norms, etc) related to

biofuels, environment, energy, agriculture, decentralization and regional governments (see appendix C).

− Governmental documents, like internal policies, policy guidelines, national reports. − Web pages of public institutions, NGOs, international cooperation, agreements, etc. − Work papers of some CTB´s members, action plans, strategies, meeting minutes, etc. − Books about similar analysis and journal papers. − Press releases. 3.2.2 INTERVIEWS The interview is a strategy for getting people to talk about what they know; the problem of the researcher is to be able to understand what his informants know (Southwold, 2002). For Kumar (2005) an interview is any person-to-person interaction between two or more individuals with a specific purpose in mind. The sample for the interviews was selected applying a non-random sampling, which ‘is used when the number of elements in a population is unknown or cannot be individually identified’ (Kumar, 2005:177-178). This type of sampling also considers four designs; one of them is the purposive sampling that is very useful to describe a phenomenon or to develop something not well-known. The researcher will approach to the people who in his opinion have the required information and are willing to share it (Kumar, 2005). According to the first literature reviewed, the researcher knew in advanced that there are four ministries involved to biofuels policies in Peru and that each ministry has only one main person responsible for the topic. In that sense, these four representatives have been interviewed at national level. At regional level, in order to understand the dynamic of the Conciliation Table on Biofuels, the total of members (11) has been included in the sample. Additionally, the two external regional actors (non- members) have been interviewed and are considered as key players in the development of biofuels in the region (private sector and international cooperation). In total, there are 17 key informants for the present study. The people to be interviewed should satisfy three requirements: be acknowledgeable about the cultural arena, be willing to talk and represent the range point of view (Rubin & Rubin, 1995). The semi-structured interviews were conducted on the basis of a written list of questions and topics that needed to be covered in a particular order (Russell, 1988). There are certain advantages in using this type of interviewing. For example, the interviewee can express himself in his own way of language, the interviewer can be aware of any new information that appear during the interview, and the data from the interviews is commensurable because the same topics have been developed

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with each informant (Southwold, 2002). All the 17 interviews were recorded, complementing with some notes. The first group of interviews was conducted in February 2009 (10 interviews), while the second group in April of the same year (seven interviews). A general topic list has been prepared for the interviews according to the theoretical framework (see appendix A) that means, based on the dimensions of the policy arrangement and the governance capacity. Moreover, the topic list varies among the Ministries, the CTB and the external actors, because each group has different perspectives and contexts, so they can provide valuable diverse information. This resulted in four different questionnaires with open-ended questions that leave the interviewee explaining in detailed some of their answers (see appendix A). In the case of the CTB itself, the questionnaire was the same for all the eleven members: some of them could explain in more detailed some of the questions (for example, public sector or SNV) since they are more involved with the topic. The questionnaire for the ministries is the same for all the four, but it varies from the questionnaire of the CTB, because it should focus more on national policies, trends, ministry organization, intersectoral actions and their view of decentralization from central government. Finally, the questionnaire for private sector or international cooperation working on the region focused more on their job and the way they are contributing to the regional development, as well as how they see the work of the CTB and if they indirectly work to achieve same goals, etc. 3.2.3 OBSERVATIONS The key role of observation in social research has long been acknowledged (Angrosino, 2007). Observation is a purposeful, systematic and selective way of watching and listening to an interaction or phenomenon as it takes place (Kumar, 2005). Observation in the research content is more systematic and formal than the observation that characterizes everyday life; indeed, the human ability to observe the world provides the ability to make commonsense judgments about things (Angrosino, 2007). Participant observation was conducted during the last meeting of the CTB in Chiclayo city on 21 May 2009 with fifteen participants: three guests and twelve people representing seven CTB´ members. In some cases, there was more than one person per institution. Angrosino (2007) identified four different types of observation based on the participation of the researcher during the fieldwork. For the current case study, observations were classified as participant-as-observer, because the researcher was well integrated into the dynamic of the CTB. The observations focused on how the members behaved during the three-hours meeting, seeking to see and confirm the main role of the GRDE and SNV, the response of the participating members, the organization of the agenda, the decision-taking process and other spontaneous actions. 3.3 DATA ANALYSIS “Data analysis consists of examining, categorizing, tabulating, texting, or otherwise recombining both quantitative and qualitative evidence to address the initial propositions of a study” (Yin, 2003: 109). Analyzing case studies is particularly difficult because there are no well defined techniques and strategies. For the purpose of the current research, data analysis is defined as the analysis of all

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information collected from the interviews and the observation during field work, as well as the literature review used to complement the analysis. There is an important strategy to analyze data collected described by Yin (2003): rely on theoretical propositions. In this sense, the theoretical framework shapes the data collection plan, helping to organize the entire case study, and therefore defines alternative explanation to be analyzed. The analysis of the case study is indeed based on propositions of PA and GC approaches. According to them, the answers of the semi-structured interviews were organized following the dimensions and indicators of the approaches. This strategy of analysis might allow answering the research questions posed at the beginning of the research. The information collected during the interviews was processed by the coding technique. First, the interviews were transcribed; second, the responses were classified under the main themes that were used to structure the questionnaires based on the theoretical approaches; and third, the themes and responses were integrated into the report telling the story of the CTB and national political context. According to Miles and Huberman (1994: 56), “coding is used to review a set of field notes, transcribed or synthesized, and to dissect them meaningfully, while keeping the relations between the parts intact”. Doing ‘coding’ implies the use of codes, which are tags for assigning meaning to the descriptive or inferential information collected. Codes can be attached to words, phrases, sentences, and paragraphs, which will help to organize the data, allowing the researcher to find the information quickly and group the parts relating to the research questions (Miles and Huberman, 1994). The coding process of the present case study led to the division of three results chapters regarding the research questions and considering that a lot of interesting and useful information has been available. 3.4 VALIDITY AND RELIABILITY Research design suggests standards for good and convincing research; these standards most frequently used are those of validity and reliability (Rubin & Rubin, 1995). Reliability and validity are conceptualized as trustworthiness, rigor and quality in qualitative paradigm according to Golafshani (2003). The development of case study designs needs to maximize conditions of internal and external validity and reliability related to design quality (Yin, 2003). The present section deals with these standards in regards of the case study. 3.4.1 VALIDITY Kumar (2005) stated that the validity is the ability of an instrument to measure what it is designed to measure. According to Yin (1994), there are three types of validity: construct, external, and internal validity. “Construct validity refers to the establishments of correct operational measures for the concepts being studied” (Yin, 2003: 34). Construct validity is especially problematic in case study research. It has been a source of criticism because of the potential investigator subjectivity. Yin (1994)

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proposed three remedies to counteract this: using multiple sources of evidence, establishing a chain of evidence, and having a draft case study report reviewed by key informants. Considering Yin’s solutions, the actual research includes certain level of construct validity, since different sources of evidence were used to corroborate information provided by the key informants like official web pages, official documents, laws, agreements, among others. A presentation of first results was done to the CTB’s members for feedback. External validity deals with knowing whether the results are generalizable beyond the immediate case (Tellis, 1997). For Guba and Lincoln (2005 cited in Agrosino, 2007), the external validity is the degree to which the conclusions of a study have relevance to matters beyond the study itself. “The external validity has been a major barrier in doing case studies” (Yin, 2003: 37). For example, Moll et al (2002) indicate that a case study cannot be representative of the whole population, that there is more likely to get variations in answers and that the external validity does not exist. However, case studies rely on analytical generalization, where the investigator is trying to generalize the results to some broader theory (Yin, 2003). Understanding the external validity, it is possible to bring the findings of the case study to a theory, because the case study allows the analysis of each concept and indicators framed by the policy arrangement and the governance capacity approaches. At the end of the research, it will be possible to determine if the governance capacity is the suitable approach for evaluating a policy arrangement, as Arts and Goverde (2006) stated. Each technical ‘table’ promoted by a regional government presents similar political or organizational structure because of the public structure itself. However, the actors, the geographical, social and economical context are not the same. In this sense, the findings of the CTB cannot be statistically generalized to other similar cases but analytically generalized, using same theoretical approaches. The Governance Capacity of different technical tables can be compared in order to understand and improve similar regional processes that currently are working on biofuels in Peru like San Martin, Piura, and Ucayali. There is also an Internal validity, described as the degree to which the conclusions of a study make sense, if they are credible to the people studied as well as to readers of the report, and if the final product is an authentic record of whatever it was that was observed (Guba and Lincoln, 2005 cited in Angrosino, 2007). Internal validity is a concern only in causal explanatory cases. This is usually a problem of "inferences" in case studies (Tellis, 1995). Yin (2003) mentioned that internal validity establishes a causal relationship, where certain conditions lead to other conditions, as distinguished from false relationships. During the last CTB meeting the GRDE included in the agenda a presentation of the current research progress in order to inform to the members how the process was developing. This meeting was very useful to improve the internal validity of the case study, because the theoretical approach, methodology and some first results were exposed to the members getting a feedback of the information. Some concepts were clarified in order not to misunderstand the final results; now the results of the analysis are more credible for the people studied.

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Additionally, there is Kumar’s validity classification (2005) that defines face validity (each question must have a logical link with the objective) and content validity (questions should cover the full range of the issue being measured). It is possible to see from the questionnaires how the questions are grouped according to the objective and the research questions of the study, trying to address the full range of the topic. Additionally, the theoretical approach shaped the questionnaires and there were a few different questions regarding to the group of actors interviewed (see appendix A). 3.4.2 RELIABILITY Guba and Lincoln (2005) describe the reliability as the degree to which the process of research has been consistent and reasonably stable over time and across various researchers and methods (cited in Angrosino, 2007). For Kumar (2005), if a research tool is consistent and stable, and, hence, predictable and accurate, it is said to be reliable. For Golafshani (2003), the quality of qualitative research means reliability, which is the most important test and has the purpose to generate understanding. Yin (2003) mentioned that the goal of reliability is to minimize errors and bias in a study, documenting all the procedures of the case; the idea is to make many steps as operational as possible. It could be forecasted that the case of the CTB presents reliability because of some reasons. Firstly, the research is considered transparent because it tries to provide to the readers the evidence and the logic of the main conclusions as well as the basis process of data collection; there are several quotations from the interviews transcripts to back up the key points, making the research process visible by vividness and clarity of the examples. Secondly, themes of one interview were examined for coherence with themes presented in others. In the case of different points of view, all of them were tried to integrate in the text, making the research more credible; for example, the Regional Management of Natural Resources and Environment or the enterprise BIOPER, both have different ideas about the CTB process. Finally, Rubin & Rubin (1995) said that the richness of detail, abundance of evidence and vividness of the text will help to convince those who have never been in the field. The report seeks to communicate what it means to be within the biofuels arena in order to show the research setting.

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4 POLITICAL NATIONAL CONTEXT This chapter provides an overview of the political context of Biofuels in Peru, which currently defines two main aspects, i.e. the National Biofuels Policy, and the Decentralization Policy of the country. These main topics are described in two sections in detail according to the public structure of the sectors involved. The information presented is based on the interviews, official documents and reports, legislation, web pages, press releases, personal experiences and other reports. Both sections start with a diagram that shows the whole picture of what the political setting and structure are for biofuels at national and regional level, respectively. 4.1 NATIONAL BIOFUELS POLICY In August 2003, the story of biofuels in Peru started with the official publication of a new Law No. 28054 “Law on the Promotion of Biofuels Market”. This law framed the overall context to promote the development of biofuels markets in the country. In this regard, four ministries are involved in the definition of public policies on biofuels: the Ministry of Energy and Mines (MINEM), the Ministry of Agriculture (MINAG), the Ministry of Production (Produce) and the Ministry of Environment (MINAM). Figure 2 illustrates the legal framework for national biofuels, the sectors involved and how they are related, the biofuels structures within the sectors and the international agents that participate at this level. This section describes all the components identified in the biofuels arena at national level in Peru. Figure 2: National Public Biofuels Structure

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4.1.1 THE MINISTRIES INVOLVED There are two important factors for the Ministry of Energy and Mines to be interest in biofuels. Firstly, four years ago, biofuels was a very interesting business opportunity. It was announced that United States and European Union would require a blending percentage of ethanol in the gasoline and biodiesel in diesel. Some interest groups were formed and started lobbying to promote industrial investment from the State. The second factor referred to the former Deputy Minister of Energy (Mr. Pedro Gamio), who was very committed to bring to Peru a new market on renewable energies (not only biofuels) during the last two years, achieving excellent results and promoting the bioenergy platform at all sector levels. "The business opportunity and the deputy minister’ interests were moved at the same time; on one hand, Energy was leading the platform initiative and on the other hand, interest groups, local and foreign investment, wanted to invest due to interesting business opportunity" (MINEM interview). The interest of the Ministry of Agriculture (MINAG) for biofuels started with the establishment of the Law Nº 28054 in 2003. MINAG showed several interests in developing agro-industry, based on energy crops, generating employment and controlling environmental pollution. The Minister and the Deputy Minister have interest to promote biofuels projects in order to ensure the rural development. The Ministry of Production (PRODUCE) is interested in the promotion of biofuels as part of the agribusiness development in the country, but under certain conditions and regulations. "For instance, ethanol from sugarcane is wonderful, but if the cane is burned, it is no longer wonderful; palm oil is also very good, but if you are going to raze the forest to plant palm, then it isn’t" (PRODUCE interview). PRODUCE was involved with the issue since the beginning of the process, promoting the policy platform of biofuels. Although the Law on the Promotion of Biofuel Market traces guidelines on the procedures in the sectors, conversations about biofuels started in PRODUCE with the officer Luis Paz, who formed a working group in the year 2007, called COBER. The interest increased after some meetings that Mr. Paz organized in the Ministry. “I'm here by chance, all started when I was sent to an event on energy outside the country and I only knew at that moment about ethanol based on sweet potato. Then came the interest of promoting the subject and I gave some talks; up to twenty people were here in the eleventh floor of the ministry” (PRODUCE interview). The National Commission for Development and Life without Drugs - DEVIDA participated in the first meetings since the Law clearly states that one of its objectives is the fight against drugs, and biofuels are presented as a great alternative to eradicate coca crops in

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some areas. "We follow with great enthusiasm, we did the first COBER, and it was an entire organization. At the beginning some people only wanted to deal with the issue of biofuels, but we insist to include all energies". After the organization of COBER I, COBER II came in 2008 and a third COBER is schedule for this year (PRODUCE interview). Almost one year ago, it was adopted the Law of Foundation of the Ministry of Environment (MINAM) by Decree 1013 on May 2008. For the first time, environmental issues acquire the same hierarchical level as other public sectors such as energy, health, education, etc. MINAM is a new Ministry that created an enormous change in the environmental history of Peru. Previously, environmental issues and natural resources were responsibility of the National Environmental Council (CONAM) and the National Institute for Natural Resources (INRENA), respectively; both have been absorbed by Environment and Agriculture sectors, according to the issues that they are responsible. The current Deputy Minister of Strategic Development of Natural Resources of MINAM was formerly Deputy Minister of Agriculture, and from that sector she started to see the issue of biofuels; once in MINAM, she gave the impulsion for further work (MINAM interview). When MINAM was created, a very well known ecologist, Dr. Antonio Brack Egg, was designated Minister. One of his first contributions to the topic of biofuels was to provide three main guidelines regarding biofuels: No Logging of Primary Forests, Proper Management of Water Resources and Food Security. Based on these policies, the topic began to be promoted. After a year, the Ministry also refers to the Biodiversity and Land Management, since the subject of biofuels has been developing strongly in the Amazon where land is fundamental for biodiversity conservation and natural resources in balance with the production of biofuels. It would then be five policy guidelines by MINAM (MINAM interview). 4.1.2 THE BIOFUELS LEGAL FRAMEWORK Before the Law of Biofuels in 2003, the installation of Oil Palm Plantations was declared as National Interest by Supreme Decree 015-2000-AG in the year 2000, with the objective to promote alternative rural development and increase the national offer of vegetable oils. One year later, the National Plan of Promotion Oil Palm was approved by Ministerial Resolution Nº 0155-2001-AG. Currently, there are oil palm plantations in the Amazon, not only for human consume but also for the production of biodiesel. After the biofuels Law, the central government established a Technical Committee for proposing and recommending standards and additional provisions to enforce the law, submitting a final report in May 2004. In 2005, MINEM published the Regulation of the Law 28054 by the Supreme Decree 013-2005-MEM, which set the percentage of mixtures of ethanol and diesel. In 2007, MINEM created the Regulation for the Commercialization of Biofuels also by Supreme Decree 021-2007-EM, establishing the compulsory use of biodiesel and ethanol as following: B2 diesel (2% of biodiesel in diesel) by 2009, gasohol (7.8% of ethanol in gasoline) by 2010 and B5 (5% of biodiesel in diesel) by 2011. With those regulations, the binding and the implementation schedule for biofuels in Peru was determined. Moreover, the MINEM promoted the diversification of the National Energy Matrix, consisting of 33% from renewable sources, being biofuels one of them. "Previously in

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2003, there was only the law, but after 2007 the use of biofuels are now compulsory, although perhaps the mixture percentage was not the best" (MINEM interview). With this step, Peru gave a clear message to investors, ensuring the demand for biofuels from a mandatory blending percentage in the whole national territory. However, when there were concrete steps to supply the domestic market with B2 in January 2009, problems began. There was not the sufficient national installed capacity to cover this demand and assume the commitments. Today Peru is importing biodiesel to supply its market (MINEM interview). The biofuel law also designated some specific competencies to the Ministry of Agriculture, in order to identify crops for energy production. Since then, the Ministry has carried out various activities to contribute developing public policy without violating the Ministry's own priorities like Food Security and Conservation of Natural Resources (MINAG interview). In January 2008, the installation of Wild Cane and Bamboo Plantations was declared of National Interest by SD Nº 04-2008-AG for energy proposes. Additionally, in July 2008, the Peruvian Government declared of National Interest the installation of Jatropha curcas (jatropha) y Ricinus communis (higuerilla) plantations as an alternative to promote biofuels in the Amazon. In November 2008, MINAG developed the proposal “Policy Guidelines for the Development of Energy Crops in Peru”, which has been very useful for the Ministry and other public sectors and also between levels of government (regional and local). As the most important step, on April 18th 2009, the Ministerial Resolution Nº 0315-2009-AG was published, constituting the Working Group on Agroenergy in order to develop over the next three months the National Strategy of Agro-Energy. This Strategy will articulate the various initiatives and responsibilities of the Ministry of Agriculture in the short, medium and long term in line with the national biofuel policy and action plans promoted by regional and local governments. "This resolution requires us to develop in 90 days a National Plan of Bioenergy, because for MINAG the issue remains important. We want not only to work the issue of fluid biofuels, but solid and gaseous, too. We consider very important the contribution of biomass to distant rural areas” (MINAG interview). Despite the fact that the Ministry of Environment is new, the existing General Law of Environment since October 2005 gives the guidelines to manage and intervene in all fields where the environment is under a threat. The development of this law had involved all stakeholders, who have discussed, agreed and argued before and during the adoption of the policy decision; this time, the media played an important role. The law proposes a modern standard that highlight the measure of environmental quality and management for all Peruvians. With this law, Peru assumes big challenges and demands (Carlos Rojas, 2005). After three years of the law implementation, the National Environmental Council was absorbed by and a new Ministry of Environment was created. 4.1.3 THE BIOFUELS STRUCTURE WITHIN THE MINISTRIES The Ministry of Energy and Mines (MINEM) is complex and important. Actually, it has six general directorates: a) General Directorate of Electricity, b) General Directorate of Rural Electrification, c) General Directorate of Hydrocarbons, d) General Directorate of Mine, e) General Directorate of Mining Environmental Affairs and f) General Directorate of Energy Environmental Affairs. Organizationally, the MINEM has a unique structure, because it has a specific unit responsible of biofuels. The General Directorate of Hydrocarbons consists of four Directorates, and one of them is

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the ‘Directorate for the Promotion of Natural Gas and Biofuels’, allowing a more specialized work on the topic. Under the structure of MINAG, there are also four general directorates: a) General Directorate of Agrarian Competitiveness, b) General Directorate of Hydraulic Infrastructure, c) General Directorate of Forestry and Wild Fauna, and d) General Directorate of Environmental Affairs. There is no specific unit with functions assigned to biofuels, but it is a topic under the scope of the Directorate of Promotion of Competitiveness, which is one of the four directorates of the General Directorate of Agrarian Competitiveness (MINAG, 2009). In terms of professionals, MINAG has people dedicated to biofuels (MINAG interview). However, this number is small, since the responsibility rests exclusively on one person. Currently, the Netherlands Development Organization (SNV) is supporting with consultants the development of the national strategy for agro-energy. The Ministry of Environment (MINAM) has two Deputy Ministries: a) Strategic Development of Natural Resources and b) Environmental Management. The first one is in charge of the General Directorate for Climate Change, Desertification and Water Resources and the General Directorate of Biodiversity. The second Deputy Ministry is also responsible of two General Directorates: Environmental Quality, and Policy, Standards and Tools for Environmental Management (MINAM, 2009). MINAM does not have a specific unit for Biofuels. The issue is part of the general strategies to mitigate climate change, under the General Directorate for Climate Change, Desertification and Water. "Renewable energies must be a unit within the Ministry, they are now framed under the Directorate of Climate Change as a mitigation measure but they should take more weight. I am the only one who sees biofuels in the Ministry and they are outlined within the climate change policy"(MINAM interview). The Ministry of Production (PRODUCE ) has two Deputy Ministries: Industry and Fishery. Under the Deputy Minister of Industry, there is only one General Directorate of Industry (GDI), while in the Fishery there are five General Directorates. The GDI has four Directorates: a) Competitiveness, b) Technical Standards and Industrial Supervision, c) Chemical Inputs and Audited Products, and d) Environmental Affairs of Industry (PRODUCE web page, 2009). PRODUCE does not have a specific unit in charge of biofuels, as MINEM. Biofuels is not part of any Directorate in PRODUCE, like the case of MINAG or MINAM. Mr. Luis Paz, who is an advisor to the Deputy Minister of Industry, is responsible for promoting biofuels inside the Ministry in an informal way. This is relatively a new issue and the Ministry does not have staff with the expertise in it. There is also the Directorate of Environmental Affairs, which is responsible to review all Environmental Impact Assessment (EIA) of the industrial plants and approve them on behalf of the sector (MINEM interview). 4.1.4 THE INTERNATIONAL SUPPORTERS In 2007, the previous management of MINEM requested support from the Interamerican Development Bank (IDB) to enhance existing policy decisions to promote sustainable biofuels. Thus, an agreement was signed between these two entities under the Initiative on Climate Change and Sustainable Energy (SECCI) of the Bank, two of whose pillars are the renewable energy and

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bioenergy. Part of the SECCI objectives is to analyze the potential of renewable energy sources, minimize political barriers, promote projects, increase the use of new technologies, support countries in assessing their potential as producers of sustainable bioenergy, analyze policies that support bioenergy development, help to finance projects and support the adaptation of new biofuel technologies (IDB, 2009). In October 2007, the Division of Natural Resources and Infrastructure of the Economic Commission for Latin American and Caribbean (ECLAC) published the proposal ‘Board of Command for the Promotion of Biofuels in Peru’, seeking convergence and harmonization of public policies in favor of biofuels. In April 2008, the document was submitted to the authorities and representatives of public and private sectors. This report presents an overview of how Peru is facing the market to promote biofuels. It analyzes public management in its seven axes: institutional, energy, agricultural, economic, social, industrial and technological development (ECLAC, 2007). With this work, MINEM began a strong campaign to promote renewable energies. Under this context, IDB works with the Peruvian Government to prepare a Program for the Development of a New Sustainable Energy Matrix (NUMES) base on integral approach of all their components. For that, in May 2008, IDB approved a Project of one million dollars (US$ 1´000 000) to develop in 24 months the “Strategic Plan of Sustainable Energy and Bioenergy in Peru (PEESB)”, which will start at the end of 2009. This Project was approved after the percentage of mixture for ethanol and biodiesel had been agreed. “Maybe, it would be more convenient to have the support of the IDB before MINEM decides the percentages of the mixtures” (MINEM interview). This project has four main objectives: - Diagnose the biofuels and renewable energy sector in Peru, determining long term goals and

proposing actions to achieve them; - Contribute to the institutional strengthening of MINEM and involved agencies, designing

mechanisms to promote bioenergy and renewable energy; - Enhance the legal, regulatory and tax framework of renewable energies and biofuels; - Analyze the economic and environmental dimensions of the production chain of biofuels. Subsequently, the IDB approved two additional projects related to energy issues; in June 2008 it was approved the Support to the Energy Strategy of Peru (US $ 500,000) and in January 2009 the Program for the Development of a New Sustainable Energy Matrix I (US $ 150'000,000). Both projects involve a series of conventions and agreements with various sectors to undertake a reform of national energy policies. The borrower of the Program is the Republic of Peru and the executing agency is the Ministry of Economy and Finance (MEF). The MEF is responsible for following up the commitments set out in the policy matrix. Part of this matrix is the Support for Technical and Economic Sustainability, and one of its goals is to create a mechanism for promoting non-conventional renewable energy and bioenergy to be developed with MINEM (IDB, 2009). MINAG is also part of the program that the Peruvian government planned to develop with the support of the IDB. In the matrix of policies raised by the program, there is a specific activity to be developed by the Directorate of Agrarian Promotion (DGPA) in order to devise and implement a strategic plan for biofuels (IDB, 2008). One of the activities of the Program is the ‘Support of

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Environmental and Social Sustainability’, and in that sense, the Ministry of Environment is also involved and has responsibility to meet five commitments that are framed in a general objective of Regulation, Control and Environmental Policy (IDB, 2008). "MINAM has also signed an agreement with the IDB as part of its plan SECCI, which also sees the issue of biofuels" (MINAM interview). Additionally, MINAG has been doing technical work and coordinating with the Food and Agriculture Organization (FAO) in Lima with the aim of institutionalizing the modules that the project Bioenergy and Food Security (BEFS) is generating (MINAG interview). This project was designed at the Headquarters in Rome and is being developed in three countries: Peru, Tanzania and Thailand. The project aims to improve food security through the incorporation of sustainable bioenergy systems in rural development, and minimize the risk of adverse impacts of bioenergy on food security (FAO, 2009). The Netherland Development Organization is also supporting the work of the MINAG. “SNV has assigned a consultant to support the national plan of agroenergy” (MINAG interview). 4.1.5 THE BIOFUELS RESEARCH The crucial issue regarding the development of biofuels in the country is the lack of research. For example, MINEM has training mechanisms but not specifically to research renewable energies and biofuels. "If Peru wants to have a sustainable development, it requires more investment in science and technology. There will always be a gap between the industrialized countries and us, because they handle issues of second and third generation and we do not have substantial progress about that. Ethanol and biodiesel are not the only or the best sources for bioenergy. I believe that Peru has great potential on solid, liquid and gaseous energy. In the Amazon, hydrated ethanol is already in use for motorcycle taxis, but there is no research" (MINEM interview). Each sector must create a research unit; for example, MINEM could replicate what the National Institute of Agricultural Research (INIA) -a dependent agency of the Ministry of Agriculture-, is doing in agriculture. The ministry should develop technology for industrial processes, since it has the tools to do so, although the budget is tight. The National Council for Science and Technology (CONCYTEC) is a public body under the Ministry of Education dedicated to research and technological innovation. MINEM needs to work close to the Ministry of Education to strengthen CONCYTEC as the body responsible for new technologies, in order to avoid duplicating efforts from both institutions. However, the lack of political decisions and use of financial resources may hinder this type of dynamics. In 2007, INIA started with the formulation of the Strategic Plan for Energy Crops and currently, sugar cane, sorghum, jatropha, higuerilla and rape are being investigated. The program run for three years in four experimental units at national level; the results must be ready in 2011. For the case of higuerilla and jatropha, INIA is looking for a technology package, while the aim in the case of sugar cane and sorghum is to identify varieties with a better performance to produce ethanol. This program is very well structured and has defined objectives very clear (MINAG interview). MINAG is responsible to bring these crops to the markets, but first, a pre-assessment should be applied to confirm whether they are suitable crops for industrial development or not. For instance, INIA is doing research in San Martin region together with the regional government and the SNV. Recently,

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SNV and INIA have signed an Interagency Agreement to carry out the same research program in Lambayeque region. 4.1.6 POLITICAL CHANGES AND THE BIOFUELS PROGRESS There is a substantial progress in the promotion of biofuels in the last years. For instance, the previous management of MINEM boosted the work on biofuels cutting across sectors. It organized regular meetings to work the issue jointly with other ministries, including MINAM that has been recently created. “The MINEM was responsible for promoting the issue, but was supported by ECLAC, which with its Board of Command prompted the establishment of a Consultative Committee to allow a more comprehensive assessment of all aspects" (MINEM interview). Sometimes a change of a minister or deputy minister slows existing processes since the new management has the right to review each activity developed by the sector. Today, the approach of MINEM has changed under the command of a new Minister and Deputy Minister. The biofuels laws are being reviewed for an adjustment, because they argue that there is no technical evaluation of the entire production chain across all sectors. The current authorities want to establish technically the amount of biodiesel and ethanol as future supply. The sector is questioning whether the liquid biofuels are a real option for development and whether the approach promoted by the law is correct or not. “We need to know what is the existing capacity and how much biofuels we would utilize in future in order to change the rules and the law...it is a very sensitive issue, MINEM seeks to adjust the reality but there are commitments with companies that have already invested and you cannot waive the standards" (interview MINEM). The change of deputy minister in MINEM has been seen as a setback since the interactions with other ministries have declined, the bureaucracy has increased and the communication is not fluid anymore. "We lost a lot when the former Deputy Minister of Energy left the position, he was the link among sectors, and he always invited us offering all the facilities of MINEM for the meetings every week or once every two weeks. It was enough communication and we were in constant contact" (MINAM interview). Moreover, on January 2009, a new Minister and Deputy Minister in the Production sector were also appointed. This change delayed the work of the sector because it was needed more time to join in all activities of the Ministry. "The new ministers are aware of the issue because we have had some meetings; however, I do not see a chance in the short term to formalize a unit, but rather we must strengthen the little that exists in the Ministry" (PRODUCE interview). The Ministry of Agriculture is committed with the production of energy crops. It is part of the informal working group formed by MINEM, which is revising the Law on Promotion of Biofuels and their respective regulations. MINAG seeks to formalize this work group in order to allow a comprehensive assessment of public policies on the issue and make decisions that could guide the various stakeholders (MINAG interview). Basically, MINEM is playing a main role in leading the biofuels domain. However, the discourse introduced by MINAG is not for energy proposes. It is to ensure measures to avoid negative effects on food security and to benefit the competitiveness of agriculture by providing source energy. It is

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not only about energy crops, it is about renewable energy in general, reason why, MINAG is contributing to renewable energies in the matrix by creating the tools to support political decisions (MINAG interview). Under the current scheme of agriculture, investments are promoted under the approach of associativity. Because it is very difficult to acquire new lands, MINAG is promoting the development of projects under this scheme, which seeks to establish productive supply chains, strengthening producer associations, and creating an appropriate relationship among investors and producers. "We have various mechanisms that are aimed to support and promote this scheme in the country" (MINAG Interview). PRODUCE created a virtual network of biofuels to connect a group by email in order to share information on the development of biofuels, clean energies and climate change. This is a forum for information exchange and technical discussion. Today, foreign players have entered the forum. PRODUCE maintains informally this important dynamic. "More valuable is an email than a website where you must search for information, the email reaches you directly. This network is not institutionalized, despite their years of establishment. It only serves to share information, but not for political discussion" (PRODUCE interview). The biofuels congresses (COBER I & II) were promoted from this sector, which already have established the logistics and have positioned in the platform. PRODUCE has a training facility that is running and could be applied to the case of biofuels. The Ministry provides training as requested and has established an agreement with the National Agrarian University of La Molina (UNALM) to conduct training and technical assistance. "If a production chain at national level presents a problem, PRODUCE gives the funds to the teacher to travel and fix it in situ" (PRODUCE interview). After one year of existence, MINAM has achieved many valuable results. The international community received the new Ministry with much enthusiasm and during his last visit to Europe last December 2008 the Minister mobilized important funds (around 21 million EUR) from major governments such as Germany, the Netherlands, Finland and Poland (El Comercio, 2008). Additionally, the Free Trade Agreement (TLC) with the United States obliges Peru to strengthen the environmental authorities and management in the country (El Comercio, 2007). MINAM has progressed efficiently; for example, it pushed the Congress to amend the Criminal Code to incorporate environmental crimes determining effective imprisonment up to ten years to those who commit crimes against the environment, natural resources and ecology. It also succeeded in creating the Environmental Prosecutor unit, which will monitor the complaints; all environmental prosecutors received training. There is for the first time a high-level body such as the National Service of Protected Areas by the State (SERNANP) as an autonomous entity of the sector, which is responsible for the conservation of more than 18 million hectares of natural protected areas in the country (Andina, 2008, cited in DAR, 2009). Forestry activities belong now to the Ministry of Agriculture. Before, biofuels were raised as the great solution to environmental issues, but now, the international level has shown some negative impacts of the biofuels. Studies are required throughout the lifecycle of the crop and the assessment of the whole chain (MINEM interview). There is a project of the

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Pontific Catholic University of Peru (PUCP) in cooperation with the Swiss Foundation for Technical Cooperation (Swisscontact) to determine the "lifecycle" of sugarcane, Jatropha and palm. "For MINAG it is extremely important to know and understand these results, because they will be an important tool to take decisions" (MINAG interview). PRODUCE is also waiting for the results about the lifecycle because it may be known if a company is friendly or not with the environment before the industrial plant is ready to be installed. Moreover, the Ministry of Energy has signed several Memorandums with other countries; for example, in 2008 it was signed a Memorandum of Understanding (MoU) with United States to address issues of energy. This country has many universities with programs in renewable energies and it is possible to promote agreements with Peruvian universities. MINEM does not have a structured, ongoing and planned training program on clean energy, but there are training courses invited by other countries that are giving during the years. "We are highly dependent on international cooperation, generally most developed countries offer training programs or short courses and since we receive this information in MINEM, then it is possible to participate". It is worth mentioning that MINEM has established a fund to train the staff of the energy sector on issues related to electricity subsector (MINEM interview). There will be a major change in the Ministry of Production, because in order to authorize the construction of a factory, MINAG should certify to PRODUCE that the crop production meets sustainability criteria established by the Ministry. With the development of the National Strategy on Bioenergy, it is expected that this model would be proposed. "The company must obtain certification of Agriculture and then send it to Production” (PRODUCE interview). The ministries have the power to reject a project if it goes against the state policies, such as food security (PRODUCE interview). 4.2 NATIONAL DECENTRALIZATION POLICY Decentralization is one of the major reforms of the state in Peru, because its purpose is to intervene in the political and administrative structure in order to alter the shape and degree of state regulation in certain policy areas. Decentralization implies a new state structure that is based on the distribution of power among levels of government, which enjoyed political, economic and administrative autonomy within its competence. This new structure promotes regional and local development within a unitary and decentralized state articulating national development and interests. The process of state reform is highly political, which means a change in the internal relations of power. Therefore, an integral reform must go beyond bureaucratic modernization projects (Ombudsman's Office, 2009). Decentralization of Peru began already in 1931 with the Regionalization Program of the American Revolutionary Popular Alliance (APRA) party. Its presidential candidate, Victor Raul Haya de la Torre demanded the claiming of provinces through decentralization. The Constitution of 1933 established in its article No. 183 that the territory of Peru is divided in departments, provinces and districts. Another article created the Departmental Councils. In 1947, the president Bustamante y Rivero ordered the Military Geographical Institute to draft the country's territorial demarcation (Menacho, 2007). During the military government of President General Juan Velasco (1968-1980)

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the centralism prevailed, as in all dictatorships. However, the new Constitution was adopted in 1979 providing the foundation for the creation of the Regions (Continental University, 2008). The Political Constitution of 1979 recognized the municipalities as local government bodies with administrative and financial autonomy. For the first time, the regions are identified as territorial authorities and economically sustainable (Ombudsman's Office, 2009). In the following period of President Belaunde Terry (1980-1985), there were many proposals for new regions, but due to political decisions (the opposition) nothing was implemented (Pérez and Alonso, n.d.). However, democratic elections of Mayors were called by Supreme Decree. In 1984, the Organic Law of Municipalities has been promulgated. That same year, the National Plan of Regionalization was also approved, which set targets for administrative decentralization (Continental University, 2008). It was during the first government of Alan Garcia (1985 - 1990) when the first National Development Plan was approved, enacted 11 regions nationwide. Unfortunately, the government of Alberto Fujimori (1990-2001) was not interested in decentralization and in 1992 a new State Coup (coup d’etat) was carried out, coming back several decades of efforts to decentralize the country (Pérez and Alonso, n.d.). During this government, the departmental organization was reinstated and the Transitional Regional Administration Councils (CTARs) were created in each department as decentralized government agencies of the Executive branch. The CTARs relied on the existing Ministry of the Presidency at that moment, which were composed of seven members appointed by the Executive (Ombudsman's Office, 2009). After eleven years of dictatorship, in 2002, President Alejandro Toledo took up the issue again and this year a new law was emitted, defining a new stage for decentralization. In this context, the Law on Basis of Decentralization was adopted on July 17th, 2002, which implements the constitutional chapter of decentralization by establishing the purpose, principles, objectives and criteria of the process. In November of that year, the ‘Organic Law of Regional Governments’ (Nº 27867) was passed regulating the principles of regional management, organizational structure, the regulatory, laboral, economic and financial regime, as well as the competencies and functions. In July 2003, the new ‘Organic Law of Municipalities’ was approved; it regulates the structure and functioning of local governments in the context of decentralization. The new ‘Organic Law of the Executive Branch’ was supposed to be approved same year with the aim of adapting the new state structure; however, it was not until December 2007. In November 2002, the first regional presidents were elected democratically in the 24 regional departments in the country and the Constitutional Province of Callao. They took office from January 1, 2003 for a period of four years, being a total of 25 regional governments (Ombudsman's Office, 2009). In the second period of the current President Alan Garcia (2006-2011), decentralization is still being pushed. In 2006, the new municipal and regional elections for the current period 2007-2010 took held. The current regional and local governments must change of command in 2011 as well as the national government. In the 2007, a new law (No 29053) amended four articles of the Organic Law of Regional Governments (Ombudsman's Office, 2009). The decentralization also led to the transfer of powers from central government to regional and municipal levels, allowing the involvement of actors outside the state with various discourses. Regionalization encourages each regional government to maintain hegemony and to decide their own agenda to serve the interests of the population represented. The imposition of an agenda to the

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central level will depend on the constellation of actors and resources that exist in regional policy platform and how these actors use their resources. The Law on Basis of Decentralization established four stages for the gradual transfer of powers and functions. The first phase, covering the installation of regional governments was reached. However, the sequence of the other stages was not met. Thus, the transfer process for the third and fourth stage began without any consolidation of the integration process and the conformation of regions corresponding to the second stage. In addition, the third and fourth stages were parallel but not consecutive processes, losing the gradualism of decentralization. Additionally, the Law on Fiscal Decentralization was passed by supreme decree, which regulates, strictu senso, the two-stage transfers to regional governments, but not well to local governments. Because on December 2007 the transfer of powers could not conclude, a new deadline was available until March 31, 2008. Then it was again extended until December 31, 2008, and finally, by a new supreme decree, the deadline was extended until December 31, 2009. Until February 15, 2009, according to the information collected and supervised by the Ombudsman's Office, approximately 83% of functions had been transferred to the Regional Governments by the emission of corresponding ministerial resolutions or decrees. In the case of Agriculture and Energy sectors, the transfer of functions to the regions has been completed, while the Production sector lacks to complete the transfer to the Regional Government of Callao (Ombudsman's Office, 2009). Regarding human resources, the Ombudsman's Office said that the sectors have identified 80,152 workers to be transferred to regional governments. However, because of difficulties identified in the existing legislation, that transference has not been possible to make. As a result, the Government introduced a new law in 2007 (No 2091) to enable the transfer of human resources from the national government to regional governments, which is under evaluation by the Committee on Decentralization, Regionalization, Local Governments and Modernization of the State Management and the Committee on Budget and General Account of the Congress (Ombudsman´s Office, 2009). The Regional Directorates are decentralized agencies that represent some sectors of the National Government long before the start of the current decentralization process. Consequently, the staff and resources for such functions came from the corresponding sector. With the redesigned state based on the division of power into three levels of government, the regional directorates were converted into part of the organic structure of regional governments, becoming the technical sectoral instances of this level of government, and contributing to appropriate exercise of transferred functions from the central level (Ombudsman's Office, 2009). This situation led to some conflicts, because there was not a real decentralization of these units. In December 2006, the Law Nº 28926 was emitted to regulate the transitional regime of the Regional Directorates of the regional governments, being modified again the Organic Law of Regional Governments. After that, the regional managers are responsible for the implementation of national sectoral policies and regional policies and work under their respective regional management; in this way, the double dependency of the regional directorates disappeared, which maintained technical and normative reliance on the sector and an administrative dependency on regional government (Ombudsman's Office, 2009).

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4.2.1 IN LAMBAYEQUE The case of the Conciliation Table on Biofuels in Lambayeque (CTB) is part of the national biofuels policies and the decentralization policies since it is a regional process focusing on the development of biofuels in the region. According to the article 5th of the ‘Organic Law of Regional Governments’, the mission of a regional government is “to organize and conduct the regional governance according to their exclusive, shared and delegated competence in the context of national and sectoral policies to contribute to the integral and sustainable development of the region”. The next Figure 3 illustrates how the involved sectors like MINEM, MINAG, PRODUCE and MINAM access to biofuels in regional governments, for instance, like in Lambayeque region. All the sectors must treat their concerns directly with the chair (regional president) of the Regional Government of Lambayeque (GRLAM). The regional president coordinates directly with the managers of the regional managements (GR), which at the same time should arrange with its regional directorates (DR). However, each sector is well represented in the regions by regional management and regional directorates, under the structure of the regional government. PRODUCE, MINAG and MINEM are in charge of three different regional directorates under the Regional Management of Economic Development (GRDE), while the Regional Management of Natural Resources and Environment (GRRN) represents the environmental sector. The National Institute for Agrarian Investigation (INIA) and the National Service of Agrarian Health (SENASA) are both decentralized public agencies dependent on MINAG at central level. These institutions have decentralized offices in each region nationwide. In Lambayeque region, they are members of the CTB as public institutions related to the topic. The national legal framework allowed the GRDE to establish the CTB by creating a regional executive resolution. At

regional level, only the Ministry of Production is not a member of the CTB, but it is indirectly represented by the GRDE. 4.2.2 THE MINISTRY OF ENERGY AND MINES The process of transferring responsibilities of energy and mines sector to the 25 regional governments concluded through five ministerial resolutions (009, 046, 121, 145 and 503) of 2008, (Ombudsman's Office, 2009). "Decentralization is a process which I believe is not yet finished; the transfer of functions is over but in practice is not yet as we wanted" (MINEM interview). In the regions, the sector is represented by the Regional Directorate of Energy, Mines and Hydrocarbons (DREMH), which depends on the Regional Government. In the case of Lambayeque, the DREMH is under the authority of the GRDE, both members of the CTB. "I think the Tables of Conciliation are essential; it would be interesting and necessary that representatives of central government participate in these spaces of dialogue. In this way, the central government is aware of the needs of the regions, and based on knowledge they can propose guidelines and concrete actions to implement them" (interview MINEM).

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Figure 3: Decentralization involving biofuels

Regional Governments have autonomy to work on technical standards to be implemented in their regions. The rules are competency of the National Institute for the Defense of Competition and Protection of Intellectual Property (INDECOPI). "Standards are developed jointly and then they can go and ask the Ministry for their incorporation” (MINEM interview). The Ministry should be informed of current situations and of the needs of actors, and then they must define policies. "I think it is a mistake to work in a centralized manner from Lima without knowing the needs of regions and their strengths and limitations, because in practice, there are conflicts when policies are not working at all sectors" (MINEM interview). MINEM should give more importance to the DREMH in order to strengthen the sector policies nationwide. The study shows

that some regions are already working on the issue of biofuels regionally, such as San Martin, Ucayali, Piura and Lambayeque. "The regions have some advance because of the interest of

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investors in developing projects and the lack of political definition from central government" (MINEM interview). In 2008, there was a strong promotion of biofuels in different regions, holding meetings among representatives and the directorate of energy in the regions (North, South, and East). However, there is no specific agreement between the MINEM and the regional government for this topic; it is more about promotion, training and regulations. "There are regions that have more strength than others, some work better than others. However, there is a learning process, which still relies heavily on NGOs and cooperation bodies” (MINEM interview). 4.2.3 THE MINISTRY OF AGRICULTURE In relation to the transfer process, the sector has delivered 34 ministerial resolutions during 2008 and only four during 2009, concluding the process of transfer powers (Ombudsman's Office, 2009). The Regional Agricultural Directorate (DRA) is the entity at regional level responsible for promoting agricultural activities in line with the national agricultural policies. In the case of Lambayeque, DRA depends on the GRDE and is part of the CTB. The level of competence of the central government is to coordinate and articulate with regional governments. MINAG carries out its activities directly targeted to be implemented by regional governments. However, regions can also work on public policy issues since this is part of their role and faculties, but policies should have a national and not purely regional approach. "I think a region has all the necessary powers to create instruments for regional development but always promoting formal articulation with Central Government, because both are seeking the same goal, which is the country's development. Regional governments should encourage the articulation but not with a past pattern of what to do at the central level but given that the whole country is being assessed" (MINAG interview). MINAG has constituted a working group on agro-energy to develop for the next three months a ‘National Strategy for Agro-energy’ in order to synchronize the various initiatives and competencies with the national biofuels policy and the action plans that are promoted by regional and local governments. This strategy will try to approach the Peruvian reality, supporting the market to meet the objectives of the law. "Some activities of this plan should be executed directly by the regional governments, so we need to work with them from the beginning. The first stage is at national level, but the second phase implies to promote all the activities at regional level although we do not have the 100% of funds but we are identifying a number of sponsors with which we could articulate...The phases of research, support and enhancement have been established to be developed with the regions” (MINAG interview). "This Plan aims to create a research network promoting the information exchange; there is a willing to develop baseline studies with the regions so that they become more aware of their scope of actions" (MINAG interview). Worth mentioning that the national plan will include financial support from the BEFS project of FAO and the ministry has committed own funds either for the plan. Also for the coming year 2010, the national plan will receive support by the FAO´s Energy Plan (SECCI) (MINAG interview). Without the participation of regional actors, the implementation

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of a plan as it has been developed will be very difficult. If there were no real integration among the different levels of the government to develop and implement the plan, time and effort would be wasted. For example, MINAG is part of the regional biofuels technical table in San Martin (PROBIOSAM); but it is neither in Lambayeque nor in Piura. The regional agrarian directorates belong to the regional government and MINAG does not have more interference on them; however, the directorates follow sector’ policies in order to continue with the same approach. "Unfortunately, the new approach is not being worked, the sectors at the central level must be incorporated into these regional negotiations, not as performers or directors, but as guides, to regulate, advise and consult" (MINAG interview). The MINAG is involved directly in PROBIOSAM, which has funds from the regional government due to the mining canon. Because of the several million Soles per year, there is a need for a structured program that complies with formal rules and procedures to operate their activities. Unfortunately, not all spaces of conciliation have the same characteristics, resulting in a more difficult way to articulate and coordinate with them. "San Martin has a structured program and meetings have been scheduled, so you can participate in the work of the CTB. I consider that a space for dialogue such as the Conciliation Tables should be structured and in their statutes should be stated the dynamic of the process ... MINAG could be part of the CTB in Lambayeque and we could attend their meetings, but it depends on how they structure their work (MINAG interview). 4.2.4 THE MINISTRY OF PRODUCTION PRODUCE has completed the process of transfer competencies on fishery and industry to the 24 regional governments. In the case of the regional government of Callao, the process has not concluded, but a commission has been formed to end it (Ombudsman's Office, 2009). Like the others, this regional directorate of production is under the regional management for economic development, aligned under the policies of the ministry. There are certain policies that the central level must address, such as taxes. However, it might be possible to consider a regional tax on long-term, given that decentralization should occur at all levels in future. "I believe that ideas created locally are more effective than created at national level, and more as a mega diverse country; each region is different and presents different conditions, so not everything can be treated in the same way" (PRODUCE interview). To support decentralization, there is the agreement between PRODUCE and the National Agrarian University (UNALM) to provide technical assistance and training nationwide. During the implementation of the agreement -between October and December 2008- there were about 300 requests for support, of which 234 were approved and 159 were carried. It was conducted 26 workshops for the identification of productive chains, 106 trainings and 27 technical assistances over 21 regions of Peru, benefiting a total of 4021 people (PRODUCE, 2009). "It is strength of the ministry to provide training as it is requested; it can be applied to the case of biofuels" (PRODUCE interview). PRODUCE does not have a specific agreement with a regional government, rather informally as there are some interests held together with mutual support. "I believe that these regional initiatives -

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such as the CTB- are good examples of decentralization; they should be more supported" (PRODUCE interview). However, there is a need for these ‘tables’ to resolve first their internal problems and those generated by the same members. "The ‘tables’ want to work an issue but sometimes the responsible of the sector does not have the resources or do not agree to do so, then internal conflicts will start ... it is necessary to maintain the motivation of ‘tables’ and that is the role of the regional government" (PRODUCE interview). 4.2.5 THE MINISTRY OF ENVIRONMENT Before the creation of the new Ministry of Environment in 2008, the environmental issues were responsibility of the National Council of Environment (CONAM). Environmental public functions started to be transferred to the regional governments during CONAM period. The ‘Strategic National Plan of Decentralization Process 2007-2011’ gives all the tools in order to finalize the process in 2011, having equipped and structured regional governments. This process is now following by MINAM at central level and the Regional Management of Natural Resources and Environment (GRRN) at regional level (CND, 2006). Paragraph three of article 59 of the General Law on Environment states that regional and local authorities with environmental responsibilities should coordinate and consult with each other and with national authorities in order to harmonize their policies, to avoid conflicts or gaps and to respond with consistency and efficiency to the objectives and purposes of this Law and the National Environmental Management System (General Law on Environment, 2005). The Organic Law of Regional Governments states that the executive body of the regional government must be organized into regional managements, determining five regional managements to implement specific sectoral functions (Art 12 and 29-A LOGR). One of them is the GRRN, performing specific functions in protected areas, environment and civil defense (LOGR, 2002). One of the functions of the Ministry is to monitor the performance and achievements of managing the environment at national, regional and local levels, and take the corresponding measures, supporting the regional and local governments in designing and implementing environmental policies related to their scope (Decree Nº 1013, 2008). MINAM counts with a space for intersectoral coordination and articulation, as is the Regional Environmental Commission (CAR), multisectoral and territorial instance, responsible for coordinating and arranging the regional environmental policy, promoting dialogue among public and private sectors to facilitate regional environmental management (MINAM, 2009). The GRRN has the same level as the GRDE of the regional government; both are members of the CTB. However, they do not share similar ideas on the topic of biofuels. The first has expressed discomfort with the promotion only of jatropha and does not agree with the use of sewage to irrigate these plots, due to contamination that can be generated (interview GRRN). This member is not participating in the meetings of the ‘table’. "In the case of biofuels, the coordination with regional governments is null, we do not participate in any regional program, we are not part of any technical table, we have not even been invited to any of them ... We are new and therefore there is a

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gap within the regional governments” (MINAM interview). It is possible to see that the GRRN is not much interested in the ‘table’, while MINAM does want to participate. The regions should have the ability to lead regional processes in biofuels issues, developing programs with an organized plan that can be followed and monitored; usually private investors develop these plans. "What San Martin region is doing on biofuels is a good attempt, but the start was a bit messy" (MINAM interview). MINAM has only policy guidelines on biofuels and not a specific policy on the topic. "We must develop sectoral policies because having guidelines is not enough at all; we cannot advance to a regional level" (MINAM interview). There is a need to develop capabilities within the sector, starting at the central level and then regionally. "There is a professional development plan on renewable energy, including biofuels, perhaps between 2010 and 2011 funds from cooperation will be available for this issue" (MINAM interview). For example, during 2008, it was possible to work coordinately in a decentralized manner through four workshops of local and regional environmental managements offered to regional and municipal governments. The workshops were carried out to identify the needs for strengthening the environmental management of these governmental bodies, involving 600 people among provincial and district mayors, regional and local managers and other authorities (Andina, 2008 cited in DAR, 2009).

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5. THE REGIONAL BIOFUELS ARRANGEMENT Due to the fact that the decentralization process allowed the participation of several non-public actors in public decision-making, several political spaces have been created in order to promote dialogue among different actors form different sectors and levels. Given the global context of mitigation regarding climate change and the business opportunity with alternative fuels rather than expensive fossil fuels, some regional player’s lead the discussion of developing crops in the region for energy purposes, satisfying further interests like economic, social and environmental. In this way, after few meetings promoted by key actors, the Regional Management of Economic Development (GRDE) sponsored the creation of the Conciliation Table on Biofuels (CTB) in Lambayeque as a formal space, open to dialogue and conciliation. The purpose if he CTB is to promote the development of energy crops with focus on economic, social and environmental criteria. This chapter is about the Conciliation Table on Biofuels in Lambayeque. As far as the theoretical framework is concerned, the regional arrangement is described and analyzed by four dimensions, which are operationalized by different ‘indicators’, as it was explained before in chapter 2.1.2. This section is structured according to the dimensions and ‘indicators’ for each of them. 5.1 ACTORS DIMENSION Two main ‘indicators’ have operationalized the actor’s dimension: a) actors’ constellation and b) actors’ coalitions. For the actors’ constellation, two main questions were posted: Who are the internal actors (members) of the CTB? Who are the external actors (non-members) of CTB involved with biofuels? For the second ‘indicator’, the following questions should be answered: who has formed a coalition or opposition and with whom? The complexity of the actor’s dimension is illustrated in Figure 4. There are in total eleven members or internal actors, who are categorized in three groups: a) public sector (6 members), b) private sector (1 member) and c) civil society (4 members). External actors are considered the eleven identified stakeholders who are working directly or indirectly on biofuels, but are not part of the CTB. These actors are also grouped as a) private sector, b) academia sector, c) international cooperation, d) local authorities and e) water authorities. In the Figure 4, the circles overlapping other circles represent the relations among the different groups of actors. For example, the internal actor of the private sector is related with a member of the civil society but not with a member of public sector. Moreover, the arrows illustrate the existing or future formal and informal agreements or cooperation among internal and external actors. This is in order to enhance the capacities of the institutions, which are based on the action plan 2009 of the CTB and their own institutional interests. For instance, one company of the external private sector works in cooperation with an internal NGO. The political context illustrates the weak coordination or support between regional stakeholders and the national sectors involved on biofuels. Only the Ministry of Agriculture has an agreement with the Netherlands Development Organization (SNV) (see section 4.1.3) and with FUNDER (see details in section 5.1.3).

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Figure 4: Actors and Coalitions

5.1.1 INTERNAL ACTORS The CTB was established officially by Regional Executive Resolution Nº 215-2008-GR LAMB/ PR on May 20 2008, and eleven (11) stakeholders of the public and private sector and civil society form it. Six entities of public sector: - Regional Management of Economic Development – GRDE - Regional Management of Natural Resources - GRRNN - Regional Agrarian Directorate – DRA - Regional Directorate of Energy, Mines and Hydrocarbons – DREMH - National Service of Agrarian Health – SENASA - National Institute of Agrarian Research – INIA Four Non-governmental organizations: - Netherlands Development Organization – SNV - Center of Social Studies Solidarity – CESS - Support Institute for Management of Risk Water - IMAR North Coast - Foundation for Rural Development - FUNDER One (1) enterprise of private sector: - Biofuels from Peru - BIOPER

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From this group of actors, the GRDE and the SNV are the key actors or key members, both of which are, in principle, advocated to the creation of the ‘table’, seeking for the participatory and sustainable development of biofuels. In Figure 4, they are represented together in the middle of the internal actors. The GRDE is responsible within the Regional Government to develop biofuels as an alternative to regional economic development. It is seen as a main player as it is committed to the development of biofuels, and it facilitates the coordination of actions among the three state levels, having political backing. The GRDE invited at the end of 2007 to participate in the CTB and develop the topic. “The regional government made the call and invited all stakeholders to participate in the Bureau” (interview SNV). “The idea of forming a ’table’ comes from the regional government during talks with SNV” (interview GRDE). The SNV has been identified as a key actor and it is truly interested in this process. SNV is a Dutch NGO with funds from international cooperation that provides consulting services. Its vision is the sustainable development of populations, with an approach on inclusive businesses through sustainable investments with social inclusion. It plays the role of the facilitator in the CTB and is very interested in a successful outcome of the process because it has have an institutional mandate to develop the theme of biofuels at national level, supporting other regional processes like in San Martin and Piura regions. To illustrate the complexity of the regional government of Lambayeque, it is important to mention that it is responsible for five regional managements: Economic Development (GRDE), Social Development (GRDS), Infrastructure (GRI), Natural Resources and Environmental Management (GRRN), and Planning and Budget (GRPP). Some of them represent directly national sectors, for instance, the GRRN, has the same hierarchical level of the GRDE. The latter is in charge of two public CTB members: the DREMH and the DRA. The other two representatives of the public sector, SENASA and INIA, are Decentralized Public Agencies (OPD) that depend functionally and financially on the headquarters in Lima, and are under the structure of the Ministry of Agriculture, but have offices and develop activities in each region. In January 2009, a new Director was appointed responsible for the DREMH. He is promoting energy activities under a sustainable point of view. It could be forecasted that further dialogue and work with this important actor will be easier than for the rest of the CTB members. Three more internal actors are part of the CTB. CESS is a non-governmental organization (NGO) that promotes local sustainable development in the North macro-region by developing capacities of poor people in order to improve their livelihoods. IMAR North Coast is another NGO that seeks to enhance the associated rural institutions and organizations related to the management of water used for agriculture activities. It works under the approach of integral management of natural resources of the Chancay-Lambayeque basin and contributes to the democratic and sustainable development. FUNDER is a civil organization with a clear objective for equitable rural development. It develops biofuels business plans for rural communities. BIOPER is a small company that still trying to produce biodiesel from jatropha in a commercial way. In the past they lost foreign investors -who wanted to invest in biodiesel with them- due to the decrease of oil price. Currently BIOPER still works with their pilot sites (plots), but not industrially. The members consider the CTB as representative, since it is involved with almost all public entities related to biofuels and some civil institutions, as well as with the private sector. However, some key players have not been considered part of the Bureau. They were invited to participate at the start but

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showed no interest. "When the announcement was made, all were invited, several players, and finally -those who were already known- stayed in the Bureau” (interview SNV). Nevertheless, how can a ‘table of work’ be representative in a controversial subject as biofuels, where the actors involved range from farmers to consumers, considering not only the crop production but also the industrialization and marketing of biofuels for ethanol or biodiesel? 5.1.2 EXTERNAL ACTORS As it was mentioned before, external actors are involved regionally with biofuels but they are not part of the CTB. It has been acknowledge by the members that there are some stakeholders that should participate due to their political influence, scope of work, technical capacity, among others. Most of them were called for the initial meetings before the creation of the CTB, but not all of them continued participating in these reunions. This section describes and analyzes the five different groups of external actors. Water Authority The National Board of Users of Irrigation Districts of Peru (JNUDRP), which is represented in Lambayeque by a Regional Board of Users, is not part of the ‘table’. But it is an associate member of IMAR North Coast, which in fact is an internal actor. Moreover, members referred to the National Water Authority (Autoridad Nacional del Agua - ANA) as a key player because of the water scarcity and the use of water for food and energy crop production. "It is a big mistake not to have the water authorities in the ‘table’, because they give permission to use the water for agriculture activities” (interview GRRNN). The ANA is a relatively new public agency that was established in April 2008 as an entity with autonomy but is now under the structure of the Ministry of Agriculture, while the central government is still discussing if it should belong to the Ministries of Agriculture or Environment. Previously, the authority that ensures the water (Water Resources Directorate) belonged to the National Institute of Natural Resources (INRENA). The Water Directorate is today the ANA, which has a higher rank in the hierarchy of the State, allowing a better management of this valuable resource. Being a new entity, it is first required to have their roles well defined and understand their scope to assess how they could work together (JNUDRP, 2006). Private sector At present, only one company (BIOPER with jatropha production) is a member of the CTB and a need for greater coordination with this key sector has been perceived. There are two major private projects in the area, one for ethanol production (Arena Verde, SA) and the other for biodiesel production (Kibux, SA); neither of them has begun to produce yet, but they already have goods, facilities and staff. If these projects were developed as they are raised, they would be of great commercial importance to the region. The respondents agreed that an immediate action should be to invite the private sector to have greater participation in these spaces for dialogue, in order to be informed about the progress.

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Arena Verde S.A is the biggest private project to produce ethanol in Lambayeque region now. Nowadays, the project plays a main role in achieving sustainable development. The company wants to become a partner for development through its investments, helping the community to improve the quality of life of their population in the area of intervention. The project has rented the lands of Morrope community for long-term period, so the community will receive every year a substantial amount of money. In this way, the project has created a ‘Social Responsibility and Sustainability Program’ to work with the community in order to use correctly the funds for their own benefit. The money paid to the community in terms of rent (land) will be spent and supervised by a steering committee. It is formed by two members of the company and four people from the community (two directors of the board and two members elected in general assembly; one must belong to the opposition list). The mission is to evaluate projects with social impact to be financed by the Trust; currently 25 projects have been presented but only six were approved (interview Arena Verde). Academia sector Members have mentioned that the National University Pedro Ruiz Gallo (UNPRG) should be part of the CTB because they promote and do research related to biofuels, as well as INIA does. However, they do not always have the economic resources for research. Consequently, to promote cooperation or support agreements among internal and external actors in order to develop the biofuels is needed / or “is of utmost importance”. “The university has shown interests and I believe we need to include them in the process, we need to reflect on that” (interview SNV). The case of the private University of San Martin de Porres (USMP) is very interesting because the main campus is in Lima city but some years ago, they installed a second campus in Chiclayo, Lambayeque’s capital. This university has more financial resources and can be an important player in the region. For instance, the community of Morrope has signed an agreement with the USMP to develop social projects in agriculture, mining, tourism and health. This occurred, because Arena Verde SA, which is the technical Director of the Trust Investment Committee, represents the Community of Morrope, and fosters agreements with academic institutions and international technical cooperation. Local Authorities and Associations Municipalities have also been recognized as important players which are part of local development processes, representing the growth of the Region. However, there are over one thousand municipalities in the region, so it might be thought to have only a representative of the entire group. "Local governments have no vision for long-term development, but not because they want to, but because they have limited knowledge, there are several factors. Then you have to work to give them tools to lead to sustainable development ... I think the ´table should take care of this governmental sector, otherwise it is unrealistic "(interview CES). In the region, there are many different types of farmers associations that work on improving productivity and supplying the market jointly. It has been discussed within the ‘table’ if these farmers associations should be part of it. However, these associations are over twenty and most of them lack basic knowledge to understand the subject. Therefore, it has been decided that for the moment they should not be included. But in the future, as biofuel projects will involve a rural community or a group of farmers, it was thought to work directly with them, taking advantage of

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this opportunity for sustainable development. "It was decided that they should not be part of the ‘table’ now, because we would share many technical issues they do not know, then it would be slower because everything would have to be explained to everyone and second because the item is new, there is much to say, much to investigate, and call at the start when we do not yet have the last word on the issue is to complicate the process" (interview SNV). International Cooperation In the region, not only the Netherlands Development Organization represents the international cooperation. There is also the case of the German Service for Social and Technical Co-operation – (Deutscher Entwicklungsdienst – DED), which is very important to be mentioned here, because one of their representatives in Chiclayo participated of the last two meetings of the CTB. This interaction occurred because DED has a local project with the community of Motupe to introduce vegetable oils as substitute of diesel for public transport. The same project is being developed in Honduras and it is sponsored by DED and the Common Fund for Commodities (CFC, 2009). DED has installed 33 hectares of jatropha carcus (jatropha) but only 15 are in production currently. However, there is a big distinction between DED project and the activities promoted by the CTB: producing vegetable oils and producing biofuels is completely different. The former requires basic process with very low investments, while the latter involves high technology to produce the fuel. The project is giving an incentive of US$ 800 and installing the irrigation technology in the land of a household, which is selected by the project technical team. Farmers are also growing other crops in the same plots like passion fruit, tomatoes and corn. It is important to highlight the strategic alliance that DED has with FUNDER Peru because this NGO develops eco-businesses with a partnership approach in three regions of the North, thus now they are supporting the production of 10 hectares, which are summed to the project as private initiatives (interview DED). 5.1.3 COALITIONS There is a strong interaction between two members, namely SNV and GRDE, which has increased over time. It can be seen clearly that they have a strategic alliance between them that places greater emphasis on the development of biofuels in contrast to the others. Nevertheless, the other actors are also developing projects on biofuels with high social impact, like FUDER is currently doing. SNV supports openly the GRDE. Each proposal, consultation, decision or activity that is done, involves the other. For example, the Action Plan 2008 and 2009 was prepared by the GRDE and SNV together; these documents are then distributed to all members to be discussed at the meetings. Comments are received, improved and approved. The CTB has not constituted working groups for specific themes to be developed in future: "Structurally, there are no working groups in the ‘table’, essentially the existing agreements are own initiatives of the institutions" (interview SNV). There are alliances that are recognized by all the members, but some are not. Some members have not been able to mention working arrangements among the actors. "I think BIOPER has been dealing with SNV and the University. I am not sure if there are more agreements" (interview IMAR).

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There is a deal between SNV and IMAR North Coast to use treated wastewater for energy crops, which should be related to other economic activities. For example, the community of San Jose is already using wastewater from Chiclayo to plant grass for cattle, producing milk that is sold dairy to Gloria Company. The idea is to introduce jatropha to give additional value to the community. The Regional Government also supports this initiative (interview SNV). SNV participates in another agreement with the GRDE and a private company that is not part of the ‘table’ - Heaven Petroleum Operator (HPO) - to undertake a topographical survey on 1200 hectares in the community of San Jose in order to see the possibility of growing jatropha industrially. The study has been done and now HPO must design the project to evaluate whether to invest in the region or not (interview GRDE). However, an official source from the Ministry of Production in Lima reported that this company has no interest in industrializing jatropha by using the traditional production system; they would make the investment when technology and specialized machinery would be available for planting and harvesting jatropha, because otherwise, it is not profitable. Currently, the SNV has signed an Inter-institutional Agreement with the INIA to develop research on energy crops, specifically with jatropha. This agreement will help to install demonstration-plots for adaptive research that will look for a new variety of jatropha that is optimum for the region. SNV will provide small funds for the research but INIA and the other stakeholders should work on allocating more financial resources to continue with the research during the next years. There is a possibility to present a proposal project on behalf of the Regional Government to a Competitive Fund, which selects the best project to be financed. In addition, the NGO FUNDER has an alliance with the company BIOPER to collect Jatropha seeds through the Organization of Low-Income Residents (constituted previously by FUNDER) and in this way, to generate more income for the people. They are developing the biofuels business plan with external funds from the Support Services Program to Access Rural Markets (PROSAMER) of the Ministry of Agriculture at national level. 5.2 RESOURCES AND POWER DIMENSION For the analysis of this dimension, three ‘indicators’ under the umbrella of resource constellation will operationalize the resources: a) financial funds, b) authority and c) knowledge and technology; the power is operationalized by power influence ‘indicator’. After this section, the reader will get an idea of who dominates the resource constellation and who has more power influence in the regional biofuels arrangements. This dimension is considered as crucial for the success of the arrangement. 5.2.1 RESOURCE CONSTELLATION Financial Resources There is no fund owned by the CTB. That means that there is no mechanism by which each member contributes to a specific fund for economic activities of the ‘table’. Members contribute to the CTB independently, according to their possibilities. In general, the SNV offers its office for the group meetings. SNV also promotes workshops and events, sharing funds with the GRDE and has a small

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budget to support research in the region. There is also an 'ordinary budget' owned by the Regional Government, which is accessible by presenting a viable proposal before the beginning of each year. Both action plans of the CTB (2008 and 2009) presented a Line of Financial Management, which proposes two very general activities that have not been planned yet and are poorly developed to date. Unfortunately, the mobilization of funds is not an easy task. The Regional Government cannot raise funds until 2010 and it depends on the ability and interest of the same GRDE to obtain more financial resources from Central Government for the regional fiscal year. It is also important to create a portfolio of projects that are of interest to private companies, international cooperation and the same national NGOs. It was mentioned that working with the Local Government would be a big advantage, this time because they have municipal funds and due to the low capacity for managing these funds it is not possible to incur in 100% of the annual expenditure. Many municipalities are spending 20% of their budgets. Involving them in projects with energy crops could be a win-win situation. NGOs like FUNDER and CES have biofuel projects in partnership with other actors. Authority The authority of the CTB is chaired mainly by the GRDE. This ‘indicator’ is much related to the power influence, which is explained further on. The GRDE has the authority and power to take decisions at regional level. Companies that develop large agribusiness investments have the resources to develop simultaneously the rural areas where the private project is located, which is considered a social component. There is no rule or law requiring the investor to develop the rural space. They only have the obligation to conduct an Environmental Impact Assessment (EIA), which identifies the impacts affecting directly or indirectly the people living around the project. After these impacts are identified, the company is required to create a plan to mitigate them. The GRDE has the ability to negotiate with investors and seek consensus on the development of the region, promoting the creation of a business-fund to improve the infrastructure of schools, health, employment, employee conditions, among others. These cases occur mainly in projects of mining, oil, hydroelectric plants, etc. There are two industrial projects in Lambayeque region but both are in their early stages so it is very hard to measure the effectiveness and power of the Regional Government to negotiate with the investors in this regard. However, in the case of Arena Verde SA, the project includes social programs to improve the livelihood of the population. The company is conscious that without local support, they will not succeed. There is a shift in authority. Various legal mechanisms provides authority to the State (various levels and entities) to prevent the execution of a project when conditions do not meet the standards set by the sector. There are a number of licenses that investors must apply for, not only at a central level but also at a regional level, and in some cases locally, as a result of decentralization. Knowledge and Technology INIA under its National Program of Energy Research is investigating jatropha, but mainly in the region of San Martin (tropical forest), where the regional government is using its own resources to

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implement the program of biofuels (PROBIOSAM) and where the SNV is too a strong supporter. With the inter-institutional agreement INIA-SNV in Lambayeque, it is expected that the adaptive investigation will begin soon. Unfortunately, research in the public sector is very bureaucratic, and apparently, INIA will start a research project from the beginning, installing and managing their land throughout the research. For instance, BIOPER has already installed three demonstration plots of jatropha and is working together with the NGO FUNDER, which has a high prestige in the region. Nevertheless, this company has not received support from INIA to continue the research, not taking advantage of the installed capacity to rescue the existing results for the benefit of the CTB. "We're trying to identify varieties of jatropha; we are finding very interesting things with the plant in saline soils. For example, there are plants that open alone without pruning and all bear fruits. We could save money on cultural activities, but we must wait and figure out if that will repeat; and if so, we could think of a seed base" (interview BIOPER). The investigation in this case is made by BIOPER, willing to share results openly, but also seeking for support from the CTB to continue with it. This is an example to show the lack of coordination among members, because despite the openly expressed interest of the members, there is no joint program to conduct the research. After a year, INIA finally established the agreement with SNV to investigate, but it is not clear whether the project will include data collected by BIOPER and will include them as a key player in the development of the subject. "The INIA will make adaptive investigation, and all that is in progress elsewhere in Lambayeque will be incorporated by them. Probably they will include the work of BIOPER "(interview GRDE). “It has been proposed to INIA to visit the plots to collect data and select plants. It is possible to obtain very valuable results but they seem not to be interested" (interview BIOPER). It has been said that universities, especially the UNPRG, have the laboratories and the capability to do research. The private sector also develops its own research to improve productivity and efficiency of the business, but it is very common and most likely that the results of these private investments will not be shared with other actors. Most of the times, the industry is jealous to share their information and the state does not have a policy with an implemented mechanism to encourage information exchange. In the case of the public sector, there is an Act of Transparency and Access to Public Information Nº 27806, which promotes transparency of public acts and regulates the fundamental right of access to information. New actors can appear suddenly in this context, and currently there is a shift in the Education program at national level. Peru is going through an Educational Reform, projecting education as of high quality in the future. However, the best universities in Peru are in Lima, the capital. It is very interesting to see how the USMP has established its first branch in Lambayeque. Since it is private, they can invest in doing research. The Region has not yet a technology package that promotes the production of biodiesel from jatropha. In this case, it is not possible to think of short-term commercial production of this crop, because investors do not want to risk their capital, especially in this period of international financial crisis. In the case of sugar cane production for ethanol, the projects must use high technology, because national policies lead in this direction. There is no need to burn the cane openly.

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5.2.2 POWER INFLUENCE The power influence is distributed between two main actors: GRDE and SNV. Both are actors with important political and financial resources to develop activities in the field of biofuels. They have the power to guide the dynamic of the process of the CTB in Lambayeque using the available resources to achieve their objectives. The members of the CTB recognize the effort they are doing for the ‘table’. The GRDE leads the regional arrangement. It tries to maintain good relations within the members and is highly involved in the issue of energy crops and rural development in the region. The members acknowledge the fact that it is a fortress to have the support and leadership of the regional government to promote the biofuels. "It's an initiative that has begun to crystallize from the Regional Government, facilitating the integration of a set of institutions with same environmental, social and regional development commitments" (interview CES). "A stronghold would be that the GRDE is seeking investments and markets" (interview GRRN). "The ability to call that has the GRDE would be a fortress" (interview BIOPER). SNV with its biofuel program has a professional person in the region responsible for the development of the issue. The SNV is the facilitator member of the ‘table’, and has the freedom to disseminate information, promote meetings, seek alliances with its members and reinforce the capabilities of the group to take forward the development of energy crops, with a primary goal of social inclusion. SNV has been identified as an indispensable actor and promoter. "The thing to emphasize is that if the ‘table’ exists, it is because of the hard work and effort of SNV, in particular thanks to Mr. Jose Muro. Logically, the ‘table’ opened thanks to the Regional Management of Economic Development, which assumed the commitment” (interview IMAR)."The fact that there is an interest sector looking for energy alternatives, a Regional Government taking this initiative and SNV facilitating the process, is positive" (interview CES). Very important to mention is that the former regional president, Mr. Yehude Simons, is now the current chair of the Council of Ministers of the Peruvian State (Premier) since October 2008. Mr. Simons promoted energy crops from the highest authority and regional policy as a great alternative for the development of the region. It is under this context that the CTB was established. The vice president of the regional government during Mr. Simons´ period becomes automatically the president until the next regional elections of 2010. There is an emotional and labor connection between the Premier and the Lambayeque region, after two continuous periods of regional presidency, allowing the GRDE to have influence in politics. INIA is the government agency that conducts the investigation, being nationally recognized. Its ability to conduct science is high; however, they do not have enough resources to do so. Despite the fact that INIA requires financial support from others to improve their research programs, it has the authority and power to decide where to do research, how and with whom to do it. INIA operates at a political level, has high capacity for influence and has been able over time to maintain its prestige and recognition, dominating the nationwide research arena.

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There are companies with high financial resources that can develop research and usually they hire specialists from universities or the public sector to participate in developing their own private research. The results are usually not shared. This is a very common strategy that reduces the bureaucratic path to implement the project and increases the quality of it. 5.3 RULES OF GAME DIMENSION As it was explained in section 2.1.2, the rules of the game are the norms that the actors must follow as CTB members; they can be formal and informal and are operationalized by three ‘indicators’: legislations, procedures, and political culture. The first two are formal rules, while the last one addresses the informal rules. All of them are consolidated into a legal and behavioral framework for the CTB, which is framed by formal legislations, but it does not have internal formal procedures, behaving accordingly to the internal political culture. 5.3.1 LEGISLATION Having mentioned the legal national framework (see section 4.1.2), at a regional level there is only one document that is the Regional Executive Resolution (RER Nº 215-2008-GR LAMB), which formalizes the creation of the Conciliation Table on Biofuels in Lambayeque (CTB). This formal document looks for the organic integration of the representatives of public and private institutions, in order to create a space for dialogue, debate criteria and proposals for the sustainable development of biofuels. The executive resolution supports the existence of the CTB, based on a global and national context of climate change, where the Kyoto Protocol is the main international agreement for countries to reduce their green house gas emissions (GHG). Furthermore, the creation of the CTB fits into the Law on Promotion of Biofuels Market, founded in 2003 by the Central Government and regulated in 2005 and 2007. Finally, this Resolution sets out regionally the objectives of the CTB and the Lines of Actions in the field of biofuels. It is in this context that the members of the CTB have been working for sustainable development of biofuels. One of the objectives of the ‘table’ is to propose regional standards for sustainable development of biofuels with social inclusion; however, this regulatory framework has not been worked in any aspect. Therefore, the region has not yet a regional policy guideline to govern the development of biofuels in this meso-level. "We have not worked the issue of regulations; what happens is that the regional government has a very strong presence at the ‘table’, then the political issues are treated very tangentially, and we have not even seen this item on our agenda" (interview SNV). 5.3.2 PROCEDURES For the purpose of the study, procedures are formal rules of the game per se, in order to guide the interactions among actors in terms of tasks, responsibilities, leadership, participation and decision-making. Unfortunately, from 2008 onwards, the working group has not developed internal procedures. It did not set out the roles, functions, responsibilities and tasks of each member, as well as certain guidelines for the dynamic of the group in the future. Most of the members recognize that

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not having an internal regulation is a weakness of the group and see the need to work on that. “It is necessary to have internal rules; we shall develop them as soon as possible in order to delegate tasks, responsibilities and roles” (interview GRDE). “We do not have internal rules and this makes the accomplishment of the objectives more difficult. We need first to formulate rules before we continue with other issues” (interview IMAR). But there are different opinions and for some of them, not having procedures also facilitates the dynamic. "We are at the beginning of the process; therefore, not having regulation is better, because it would be tedious work and the bureaucracy could hinder certain tasks" (interview SNV). In many cases, especially in countries like Peru, it is true what was said before: the bureaucracy may obstruct certain tasks, and diminishes the enthusiasm to meet the objectives. However, the rules seem to be necessary because the regional arrangement is a slow and complex process, which involves many variables. "The ‘table’ lacks a direction to achieve their goals. It is important to see who brings what and for what purpose" (interview BIOPER). Despite the fact that the executive resolution established the DRA as the Technical Secretariat, there is confusion among members about their roles and their tasks within the CTB. "No, the Technical Secretariat is the SNV; isn’t it?” (interview DRA). This observation is very important because the SNV plays a crucial role as a facilitator, and often serves as Secretariat. It is possible to infer that there is an overlap of functions among members, mainly due to the enthusiasm of some of them to meet their own institutional goals. On a more technical level, there is an Action Plan 2008 and another for 2009. There will be a shift for the CTB because the 2009 action plan has considered working on a ‘Plan and Procedures of Operation’. These two documents will be prepared by the GRDE and SNV. The action plan has six (6) major categories based on the objectives. In total, there are 16 activities in accordance with the programs and projects that each institution will probably develop during the year 2009. Each activity shows the member (s) responsible (s) and the deadline for its execution. The SNV participates in 14 of them and the GRDE in eight (see appendix B). Comparing both action plans, it seems that the plan for 2009 presents better structure and organization; however, many proposed activities for this year are the same of the last year that could not be met. In addition, the activities in the action plan 2008 do not include the person responsible or execution date. 5.3.3 POLITICAL CULTURE Actors interact to achieve same objectives, but they don’t always follow formal rules; in that sense, there is a culture within rules understood by the actors, following their instincts and interests (Arts and Van Tatenhove, 2004). Wiering & Arts (2006) point that the term ‘political culture’ frames the general patterns of the (mainly) informal and implicit rules of the game, which can be associated with certain policy domains. For the purpose of the study, the CTB is part of the biofuels policy domain at regional level and the informal rules that frame the dynamic of the regional process is considered as a political culture. The CTB moves along its activities in accordance with what its members can do. It can be said that the ‘table’ presents a ‘random-working-dynamic’ that depends on what each member can provide

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within their activities. "It was clear from the outset that all should compete on the basis of our interest on biofuels with the activities or actions that we have, which encourage the objectives of the ‘table’. For example, if the INIA has the role of researcher in the field of agriculture, then its role will support the ‘table’ in all matters related to research on energy crops. Thus, the role of each member is practically established" (interview SNV). Informally, members are committed. People talk, propose, discuss and agree. To date the CTB has not had to resolve any conflict. "There are no defined rules. We drove by what was decided at the time. If we all agree, then it does. But if someone does not agree with something, it is discussed and improved at the time" (interview SNV). There is a political culture within the members. Most of the actors belong to the public sector and they are used to dealing with policies every day. Most of them participate in such processes regionally, because biofuels is not their only concern. In that sense, there is a culture of development among actors, where the rules are implicit. Members are part of the region, they are involved in some way with the regional government and local governments; they know how policies work at different levels in the country. In the absence of internal formal procedures, the frequency of meetings has not been established. These are planned randomly and according to the needs of the group. If there is a major issue that requires a discussion in the ‘table’, GRDE calls for a meeting in order to discuss the issue together. "No meeting frequency has been set; the call is made according to the request" (interview SNV). In the case of adding a new member, there is no established formal procedure. "Those of us, who are now, are the ones who form the ‘table’, but if there would be any interest in participating, we can simply change the resolution and incorporate it" (interview SENASA). However, it is not necessary to modify the resolution, since there is no article that regulates the number of members. Hence, it is possible to interpret that the resolution leaves open the possibility for other players to join the group. "We do not have a formal procedure written in some paper that defines who may or not be part of the CTB. However, interested parties may submit their intention to join the CTB through a letter to the GRDE, then we discuss and approve" (interview GRDE). For example, the DED has participated in the last two CTB meetings, evaluating its convenience to be part of the group. When installing the ‘table’ in 2008, DED was not interested in participating since they could not even share results of its project in the region. The last 5th of June, DED inaugurated the plant to process vegetable oil from jatropha, as part of the project’s activities. For this reason they need to seek how to integrate their activities with others stakeholders in the region. 5.4 DISCOURSE DIMENSION In the field of energy crops or biofuels, three main groups of interest were identified: a) economic, b) social and c) environmental. All of these have been integrated at the regional level, becoming an official space of dialogue, information sharing and advocacy, recognized under regional public policy such as the case of the Conciliation Table on Biofuels (CTB) in Lambayeque. It is interesting to see how the CTB has internalized at regional level the three main national development interests in the field of biofuels, and how it seeks to bring in the political agenda the economic, social and environmental concerns, simultaneously. Not only has the global and national context influenced the regional arrangement, but also the same ideas, objectives and goals that each member has as an independent body.

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This section explains briefly how the three main groups of interests are integrated in the CTB, shaping a common discourse of ‘Sustainable Rural Development’ for the region. Actors share the same idea of developing the region economically with an inclusion of rural population and the sustainable use of natural resources. "I think everyone at the ‘table’ has the same goal of developing our region" (interview SENASA). "The idea is to generate better incomes, at all levels, with social inclusion" (interview SNV). "There is a strong position among the members not to use lands and water resources designated to produce food" (interview GRDE). "IMAR North Coast opened in 2000 another line of economic development, understanding that the management of water resources needs to keep its ecosystem. But the theme of water and economic development plays an environmental issue, and then there is a need to see everything together” (interview IMAR). However, since all of the members share the same reality of the region, they are focused on developing Lambayeque with a social approach on rural areas. The social dominant view is combined with the environmental and economic ideas, becoming the three together a “Sustainable Rural Development” discourse. The regional executive resolution established as a major goal: "To promote the development of biofuels under the jurisdiction of the regional government of Lambayeque, in concertation with business associations, public institutions, associations producers, NGOs and cooperation agencies, creating an enabling environment through mechanisms to enhance the benefits of biofuel production, promoting social development, economic growth, rational use of natural resources and environmental conservation and food security”. The CTB objective covers the three groups of interests. The members are concerned about the three issues equally. For instance, nowadays the projects running in the region include an environmental component, because there is a legal framework to improve the environmental management and people is more aware to conserve and protect their resources for future. The next Figure 5 ‘symbolizes’ the interests, ideas and objectives of the internal actors, which shape the common discourse. It is a representation of qualitative data provided by the interviews, official documents of each institution, and self perception and knowledge of the researcher. This diagram tries to help the reader visually for a better understanding of the complex results. Figure 5: Actors and Interests

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Economic Interests The economic view seeks to attract new investments in the region with the aim to produce biofuels and create more jobs, foster indirect economic activities, increase government tax revenues, among others. There are economic interests at national, regional and local level. The country looks for an ‘economic development’ and many achievements have been made. Today, Peru is a main producer and exporter of a range of traditional and non-traditional products, positioned globally. Regions have grown and many communities have improved their incomes due to local projects. The structure of the regional government provides a scope of how dominant the interests are. All the public actors have their own internal objectives, ideas, own interests, based on their internal policies. Nevertheless, the economic development holding a rural approach is the common goal, incorporating environmental issues, since environmental policies are nationally implemented. In this sense, a discourse of ‘sustainable rural development’ is framed by them. Social Interests This very important view is born in the pursuit of ‘rural development’. It is a very old discourse throughout the country, where there are still high levels of poverty and extreme poverty. At present, the priority of all government’ levels in the country is to reduce poverty, reason why social interests are in all public sectors. This rural development has been transformed over the years. The Agrarian Reform, started in 1969 by the Government of General Juan Velasco Alvarado, was the event that severely marked the rural and agricultural history of the country. According to the Ministry of Agriculture (2009), this reform resulted in a profound transformation of the reality of rural areas, allowing the elimination of many of the causes of social conflicts. However, not all of the effects of ‘land reform’ were positive; there were a series of problems, which have not allowed real development of agriculture in Peru: The associated farm production business did not achieve the level of performance desired. Given the failure of these companies, most of them collapsed, creating massive plots for individual members of these companies, which reduced productivity and efficiency in the exploitation of them. - Elimination of the land market. - Decapitalization of countryside. - Parceling and excessive smallholders. - Elimination of private enterprises in agriculture, which reduced investments in new

technologies. In the case of the CTB, the social ideas are present in all actors because they are part of the region, they are identified associated to reality, and the actors know about social problems in the region. Moreover, some organizations of the ‘table’ address social issues to their own projects, like social NGOs. The social development is now integrated with environmental issues, because the use of natural resources is the basis for rural development. Additionally, economic development is also important within the social discourse, since the rural population needs to improve their incomes in

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order to access to services and infrastructure. The sustainable rural development is framed mainly by social views but it is influenced by economical and environmental narratives. Environmental Interests This group of interest is driven by developed countries that are concerned about how developing countries threat the environment in their process of development, like uncontrolled deforestation, pollution from industry, hunting of wild animals, mismanagement of water resources, among others. ‘Climate Change’ -which is recognized worldwide- became a ‘global discourse’ and today it is integrated in the national and regional political points of view in Peru, too. The Ministry of Environment was established in May 2008, bringing an interesting change not only at government level (structure and content) but also within society. The environmental issues are now heard in schools, radio, news programs, social discussions, etc. Others concerns The GRDE has the obligation to internalize social and economical ideas because of its own structure in the regional government; however, the GRDE has also integrated the environmental view as part of its obligations within the ‘table’. It is important to mention that the dominant group of interest for the Regional Management of Natural Resources is the environmental. They do not agree with the industrial production of jatropha in the region of Lambayeque using wastewater, because the lixiviation process of the water will cause great environmental damage. Moreover, it is not a native species of the region, and it is recommended to be produced in the tropical forests where water resources are abundant. However, the rural development is still a priority, but what must be highlighted is the fact that natural resources should be treated in a sustainable way. "We look at the biofuels from an environmental point of view; it is not possible to use the wastewater to expand the cultivation of Jatropha, because it would be an aggressive threat to the underground resources... this species is not native to the department, but entered from tropical forests" (interview GRRN). In this sense, there is a necessity that all members discuss some main concerns, interests and objectives in order to meet an agreement (or consensus) on how to develop the biofuels in the future. “We need to sit down and discuss about our interests in order to see where we can converge” (interview IMAR). Additionally, there are many external players sharing the same ideas and interests; it is important to focus on external actors in order to determine if they fit within the work of the CTB regarding the development of biofuels in the regions in a sustainable and social inclusive way. There are different interests inside the CTB because of the diversity of actors and their own institutional objectives. There are actors which have strong social interests, and their institutional objectives focus on social development. However, these are aware that the only way to develop the rural areas is by promoting the economic development with the proper use of natural resources. Parallel to this, it is necessary to work on other aspects that are not directly related to the activities of the CTB, such as education and health, which are basic needs for development, but scare within the rural population.

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6. THE GOVERNANCE CAPACITY OF THE CTB The following chapter presents the Governance Capacity of the Conciliation Table on Biofuels in Lambayeque, which was assessed by the Indicative Governance Capacity (IGC). The IGC describes the potentials of the (new) modes of governance to contribute to the solution of societal or administrative problems, which are legitimately recognized by the stakeholders (Arts & Goverde, 2006). This governance capacity is analyzed through an institutional perspective that expresses how modes of governance will influence the institutional arrangements of policy making, such as the relationships between public and private actors, rules of the games, division of resources, resulting in a certain capacity to produce expected ‘policy successes’ in the foreseeable future (Phung Kim, 2008). The IGC is also categorized into three types based on the congruence between the different dimensions that are determined by several ‘indicators’ already mentioned in section 2.1.2. This section presents the findings of the CTB in relation to the coherence of the dynamic of the process. 6.1 INDICATIVE GOVERNANCE CAPACITY The indicative governance capacity of the regional policy arrangement is based on twelve ‘indicators’ that are mainly derived from the policy arrangement approach (PAA) dimensions. Based on Liefferink (2006) argumentation, the PAA allows the researcher to start the analysis from four different analytical perspectives. In that sense, a conceptual framework is proposed by considering the common ‘sustainable rural development’ discourse as the centre of the analysis. The IGC allows to asses if the other dimensions maintain certain coherence with the main discourse, which means if the ‘indicators’ selected are supporting or not the common shared discourse. Additionally, the national context has been included in the framework explicitly and four additional ‘indicators’ have been proposed to assess the external structural congruence, which has been defined as the general legislation supporting the common shared discourse of the CTB. The strategic congruence refers to what extent the actors constellation is sharing and supporting the common discourse among them. The internal structural congruency focuses on how actors coalitions, formal rules of the game (legislation, procedures), informal rules (political culture), and resources (funds, authority, knowledge and technology) are supporting the common shared discourse. Here, the achievable objectives of the CTB have been introduced as a new ‘indicator’. The external structural congruency refers to what extent the common shared discourse is being supported by international, national and other related legislations. The next figure 6 is a representation of how the different identified ‘indicators’ are highly or lowly supporting the shared ‘sustainable rural development’ discourse of the CTB. The diagram symbolizes the findings of the present section based on the qualitative data from the interviews and literature review. It tries to give a general overview about the IGC of the arrangement, which is explained in each sub section below, organized by the type of congruence: strategic, internal or external.

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Figure 6: Congruencies of the Indicative Governance Capacity

6.1.1 STRATEGIC CONGRUENCY The ‘indicator’ of actors’ constellation has been selected to assess the strategic congruence of CTB, which is based on the degree of support from the actors to the common shared discourse. To what extent do the actors support the discourse? From a strategic point of view, in order to succeed, the actors need to share common interests and reach a consensus about the topic, thus they can work aligned to the same direction. The shared dominant discourse of ‘sustainable rural development’ was determined by the PAA, which is explained in detail in section 5.4. Figure 6 reflects the high strategic congruence of the arrangement, because despite the fact that members have their own economic, social and environmental interests, at the end, all of these interests become a common shared discourse. Because there are still different ideas and beliefs among the members, the ‘indicator’ does not represent the 100 % of the support. When the regional internal actors talk about ‘economic development’, they refer mainly to the rural areas, where some populations still living under poverty conditions require support to improve their lives and economies. Members' concerns focus on how to develop the rural areas in a sustainable manner. In general, it seems that all actors are conscious about environmental issues and the need to introduce environmental concepts in public policies and into rural population development. There are many possibilities to address climate change to rural and economic development and members of the CTB are working on that.

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The CTB is strongly promoting the production of biodiesel from jatropha as the best alternative for rural development, because it does not require high investments like the production of ethanol from sugar cane. CTB is not promoting more sugar cane plantations but they do agree with ethanol private projects in the regions, since they mean economic and rural development, but under certain conditions like the proper management of water and biodiversity as well as social responsibility and social inclusion. However, the findings of the case indicate that high private investments are not destined to the production of Jatropha, because there are not yet scientific proofs of its performance industrially. Only one member considers this species as a non-native plant that can become an invasive species, damaging soils and the environment. However, there is no research to support these arguments, while there are some rural communities planting jatropha in their lands without any negative impact reported. Moreover, the DED is betting for jatropha production in the region, providing technical and financial support to develop it commercially. Nevertheless, regional environmental sector wants to promote biofuels from second generation using the huge dry forest of Lambayeque in a sustainable way as basic source. The idea sounds interesting, but today, the region is focused on the development of agriculture. 6.1.2 INTERNAL STRUCTURAL CONGRUENCE For the purpose of the study, the structural internal congruence is determined by how the dimensions are supporting the shared discourse by assessing ‘indicators’ like actors’ coalitions, formal rules of the game (legislation and procedures) and resources (funds, authority, knowledge and technology) in order to see if they are supporting the shared discourse. Here, the achievable objectives of the CTB have been introduced as a new ‘indicator’. Coalitions supporting shared discourse There are different kinds of coalitions among the members inside the CTB, which are supporting the shared discourse to an upper intermediate level. If some member carries out an activity in the field of biofuels, it is always done in cooperation with some other party that can be an internal or external actor. Because SNV is very interested in developing biofuels under a social inclusion approach, it takes part of most coalitions of the CTB, and is the only member who has a kind of agreement with the GRDE, INIA and IMAR at a regional level. It seems that a SNV strategy is to work under the umbrella of an agreement in order to address their ideas; in that sense, the common shared discourse is supported by all coalitions where SNV is participant. Moreover, SNV is a stable actor with a biofuels program in the country, for what it is expected to maintain the formal and informal coalitions in the region on the field of biofuels. The action plan for 2009 (see appendix B) shows the different activities that the members have planned for this year; also, it establishes which members is responsible for their execution. In this context, members tend to form new informal coalitions because they will work together to develop some specific activity, like SENASA – INIA - DRA - SNV, or SENASA – DED. The latter is considering a work in cooperation with an external actor. In addition, the NGO FUNDER has an existing agreement with BIOPER and with DED. Although FUNDER and BIOPER have not

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participated in the last meetings, they are working to develop biofuels sustainable with a rural approach; as a result, they are supporting the dominant discourse of the CTB even though they are not well integrated in the process. The majority of the members are from the public sector; therefore it seems to be an intrinsic coalition among public actors. It was perceived from the observations of the last CTB meeting (May 2009) that public actors are very supportive among them; they maintain formalities and agree with the others’ comments. The public sector always participates in the meetings, and in some cases, two representatives from the same institution take part of them. It was said that coalitions sometimes are formed among internal and external members. It is very important to promote agreements with external actors in order to enhance the support to the shared discourse; some of them might be a strategic ally, like DED or Arena Verde SA (see section 5.1.2). Although these actors are important, they invoke different ideas, because the former is producing vegetable oil and the latter ethanol. However, they are ‘developing the rural areas’ because the projects are located in local communities lands, and they are working jointly with the local population. The other identified external actors support the shared discourse from the outside, because they also share similar group of interests (economic, social, environment). Objectives supporting shared discourse The general and specific objectives of the CTB support the shared discourse in an upper intermediate level as it is illustrated in figure 6. The general objective addresses the economical, environmental and social discourse: “to conciliate with public and private actors the production of biofuels, in order to contribute to the sustainable use of available resources in Lambayeque with social inclusion”. The CTB specific objectives are listed as following: a. To encourage the development of research in energy crops and biofuels production, b. To articulate the institutional and professional capacities, c. To propose standards for the regional development of biofuels linked to national policies, d. To propose the Regional Program of Biofuels, e. To help guiding private investment, f. To exchange information on funding opportunities.

The specific objectives represent the way that the CTB is planning to contribute to the sustainable use of available resources in Lambayeque; they are focused on research, institutions, legal framework, private investors, mobilization of funds, etc. All of them are indirectly related to social and environmental issues. A ‘sustainable rural development’ is related to research. It is necessary to provide the rural farmers with a technological package including the variety of crops with the highest performance, for instance, of jatropha. It is urgent for the state to enhance the institutions and build capacities of people working in the field in order to be able to guide them technically. Moreover, adequate standards for the implementation of a project are required to enforce the existing legal framework and guarantee the participation of local populations. It is important to provide information to the private sector and guide their investments in the proper way to support

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the common shared discourse. The establishment of a ‘regional biofuels program’ is a very ambitious objective, since a regional program will not work without sufficient financial funds, like the San Martin program, where the regional government receives funds from the mining canon. Some members consider very remote the possibility to establish a regional program. “I think a regional program will have some problems, actually because there are no human resources; which should be the priority, energy or productive crops?” (interview GRRN). “Here in Lambayeque there are not enough resources and to establish a program now I think it is not possible; it is to aspire too much and we cannot accomplish it” (interview SNV). “The local governments in the San Martin region have an area of economic development that we do not have here; so this helps significantly, municipalities participate in an organized way” (interview IMAR). “The political and climatic conditions are very different in San Martin” (interview CES). During the first year of work, the CTB has been working in achieving four of the six objectives. Actually, the CTB has not prepared any proposal for regional standards on biofuels. “The best effort we made was to share the existing norms about biofuels, but we did not discuss them. I think we should” (interview SNV). Additionally, there are some activities in the last Action Plan 2009 that support the objectives like: to arrange internships in San Martin sponsored by SNV, to organize workshops at a regional level about renewable energies (SNV, DREMH), to assess the jatropha pest in Motupe (SENASA, DED), to install a plot of jatropha using wastewater (DED, HPO), to develop a project to mobilize funds (SNV, IMAR, GRDE, HPO), etc. Rules supporting shared discourse Section 5.3 describes in detail the rules of the game of the regional policy arrangement, which are categorized by three ‘indicators’ to assess the IGC of the arrangement. It is known that rules can be formal and informal. In fact, formal rules like legislation are strongly supporting the shared discourse. However, there are no formal procedures, considering this ‘indicator’ as very low support. The political culture, interpreted as the informal rules, highly supports the discourse of ‘sustainable rural development’. Despite the fact that members worry about formal internal procedures and they are aware of the need to develop them, in average the rules of the game are supporting the dominant discourse of the arrangement in an upper intermediate level (see figure 6), because the legislation gives the regional framework and the political culture guides the dynamic of work. “Because we do not have a procedure, we do not know our tasks and responsibilities, so we are practically at the beginning; we need to establish a work group to develop our tasks and goals; otherwise we continue aimlessly” (interview BIOPER). “We need to organize and to structure ourselves more” (interview SNV). However, “I consider there is cooperation among members despite we do not have predetermined mechanisms” (interview DRA). Resources supporting shared discourse There are three additional ‘indicators’ for the analysis of the internal structural congruence of the IGC: authority, financial funds, and knowledge and technology; all of them are part of the resource constellation described before in section 5.2.1. The figure 6 illustrates how two of these ‘indicators’

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are located around the lower intermediate level, because the CTB lacks of sufficient financial resources to develop their activities and the regional research on the topic is still very poor. However, the ‘authority indicator’ highly supports the shared discourse of ‘sustainable rural development’, since the GRDE has the authority and power to decide and to influence politics because it is part of the regional government. Moreover, members perceive the support from the authority, even the other public institutions, which are under the responsibility of the GRDE. The CTB does not have enough financial resources to develop their activities; sometimes the members feel unmotivated because of this important limitation. “The GRDE promotes processes, technical tables and work groups, etc, but all of them lack financial funds” (interview IMAR). “From the existing resources, none of them is destined to the functionality of the CTB, which limits a more active dynamic; we need more funds to achieve our goals and objectives” (interview SNV). “We need to work on a legal framework of taxes to promote the transfer of more funds from the central government to regional governments” (interview SNV). The CTB lacks research. Knowledge and technology are very important to support the shared discourse. INIA has the capacity to develop research on jatropha, but they do not have the funds to do it yet. “INIA is the public institution in charge of research nationwide” (interview SNV). Meanwhile private sector develops its own researches. “We do some research related to the production of sugar cane in the region, especially on water issues” (interview Arena Verde). The SNV has certain knowledge and experience on biofuels, but unfortunately, there is great uncertainty regarding the production of jatropha under industrial conditions (for example 5000 hectares) in Lambayeque. It is important to start collecting data for previous experiences that already have important results. “INIA will start with adaptive research and we hope that all that has been done until now will be integrated by them. Probably they will coordinate with BIOPER to include their work” (interview GRDE). “Research is a task for everyone” (interview BIOPER). 6.1.3 EXTERNAL STRUCTURAL CONGRUENCE

The external structural congruence is defined by the coherency among the policy arrangement and the international and national legal framework related to biofuels policies (see section 2.2). This legal framework is determined by three main ‘indicators’: a) international legislation, b) national legislation and c) other legislations. This type of congruence focuses on the legal framework that supports the shared discourse of ‘sustainable rural development’. Does the regional arrangement fit into the wider institutional context? Figure 6 illustrates how these ‘indicators’ to assess the external congruence are supporting the shared discourse, being located around the upper intermediate level. There is a high external congruence among the international and regional legal framework, because the regional executive resolution started mentioning that this effort is to contribute to the reduction of climate change impacts; thus, developing biofuels instead of continuing using fossil fuels will do. As it was mentioned before in section 1.1, international initiatives related to the topic refer to climate change and the sustainable use of natural resources, which are mainly focused on the question how to develop biofuels in the world with the minimum impact on the earth. In addition, during the past years, some developed countries have done research about biofuels, especially about the Lifecycle and now they are more reserved and discrete about the promotion of biofuels. In that

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sense, Peru started also to conduct research about the lifecycle of energy crops following the recommendation of international stakeholders. There is a project to determine the "lifecycle" of sugarcane, jatropha and palm oil from the PUCP in cooperation with Swisscontact. For MINAG and PRODUCE these results are very important for decision-making. The new global context is pushing the development of higher standards for the production of energy crops not only in developing countries but in the developed ones too. The national legal framework also supports the shared discourse very much, because the national biofuels policies and laws, as well as the national decentralization policy gave the regional arrangement the framework to exist and to work at a regional level on sustainable development of biofuels (see sections 4.1.2 and 4.2). Nevertheless, there is a lack of coordination and jointly work between both levels; therefore, the four sectors involved should enforce the existing national laws and regulations to improve the coordination among institutions and to support the work of the regional governments. “The only coordination we have had with the central government was last year, when we organized the biofuels workshop in the macro region of the North coast with the support of the Ministry of Agriculture, just because SNV has an agreement with them at the central level” (interview SNV). Some actors are more active in developing laws and regulations on biofuels than others, for instance the Ministry of Energy and the Ministry of Agriculture, as it is possible to see in section 4.1.2.

There are other national issues and legislations related to biofuels that will be important to take into account, such as food security, water management, ecological economic zoning, poverty alleviation, renewable energies, etc. These ‘other legislations’ support upper intermediate level the shared discourse, since there are some incoherencies among them and the regional arrangement. For example, the Ecological Economic Zoning (ZEE) is compulsory by law (Law 26821) as an important planning tool nationwide. However, not all the regions have developed it and it is supposed that it is the basis for planning the installation of energy crops and other kind of activities in a region. How can a region like Lambayeque promote biofuels without its ZEE? This should be a priority of the regional governments in order to plan their future activities, projects, investments, etc. The case of water management is very interesting because after many years of discussions the new Law of Water Resources was adopted. The creation of the National Water Authority (ANA) is an important step made by the central government, which has also regional offices in order to coordinate at a regional level all water issues. Food Security is a national priority and there is no possibility to use lands that can be destined to produce food crops. There is a main concern about the Amazon’ forest and how to promote biofuels there; there is no chance to use forestlands to produce biofuels, but it is possible to use deforested areas for that purpose. There is a necessity to monitor biofuels activities in order to avoid intentional deforestation for biofuels. 6.2 OVERALL REFLECTION ON GOVERNANCE CAPACITY On average, the Indicative Governance Capacity of the CTB is determined as intermediate high, because from the 12 indicators, 9 are supporting the shared discourse above the medium level, even above the upper intermediate level, as it is illustrated by figure 7. Most of the ‘indicators’ are supporting the shared discourse of ‘rural sustainable development’, which means there is congruence and coherence among the dimensions. However, there are some concerns to take into

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account. For instance, the procedures (rules of the game), funds (resources), knowledge and technology (resources) are lowly supporting the shared discourse. Figure 7: Indicative Governance Capacity

It is required to enhance these elements from the internal congruence. Firstly, internal formal procedures are needed and the 2009 action plan should describe in detail the activities with deadlines and people in charge. Secondly, the CTB should develop a strategy to mobilize and allocate funds in the region and outside. Thirdly, it is urgent to improve research in the region, not only focusing on the national institutions, but also on the academia and private ones. There are six other elements located in the upper intermediate level, like the coalitions, the achievable objectives, the political culture, the authority, the national legislation and other legislations, while the other three ‘indicators’ are very highly supportive to the shared discourse. These elements were analyzed on the basis of the qualitative data collected during the research (see section 3.2), which are framing an upper intermediate indicative governance capacity.

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7. DISCUSSION In this chapter, the main points of the research are presented and discussed, trying to explain and give meanings to the findings. It is organized in three different sections: a) results, b) theoretical framework and c) methodology. 7.1 RESULTS The regional policy arrangement is strongly promoted and supported by two main actors: the Netherlands Development Organization (SNV) and the Regional Management of Economic development (GRDE). The SNV seems to be the driving force of the Conciliation Table on Biofuels in Lambayeque (CTB), but it is too early to argue that the CTB cannot move forward without the support of the SNV. This crucial stakeholder also plays a key role in the other ‘technical tables’ of Piura and San Martin regions, providing technical knowledge and influencing politically. The public-private regional arrangement of the CTB has transformed the regional government into a sort of regional governance because public institutions, market and civil society are sharing decision-making competencies within the biofuels arena (see section 2.2). Pierre and Peters (2002:76) said- “one role of the state is achieving some degree of coordination of resources between public and private sources and at different governmental levels to support the pursuit of these goals”. The responsibility of the central, regional, and local governments is to provide a stable setting (legal framework, security, attractive economic conditions, etc.) to promote investments in the country to contribute to the development of the population. In the case of the CTB, the SNV, as a player outside the public sector, influenced the agenda setting of the government regarding biofuels, and committed itself to guide and support the government to shift to a governance process. In the study of global forest governance, Arts and Buizer (2009) used the policy arrangement approach and pointed out that the sustainable development and governance discourses ‘materialized’ in the form of new partnerships and an empowerment of non-state actors. In the context of Peru, similar discourses regarding biofuels framed a new arrangement (the CTB), allowing the empowerment of a non-state player (SNV) and creating different sorts of coalitions (see section 5.1.3) that combine economic, social and environmental interests. Despite the fact that the CTB has been working only for one year, the results of the study show the enormous potential of the CTB since the majority of the analyzed ‘indicators’ are supporting the shared discourse of the arrangement. However, it seems that ‘money and research’ are determinant ‘indicators’ for the governance capacity of the regional policy arrangement. All the members agree that research is fundamental for future planning and for example, without technical information about the entire production chain of jatropha, they cannot go farther to promote biodiesel in Lambayeque. Moreover, they recognized that the financial resources are not sufficient to implement all their activities, and they need to mobilize and allocate more funds from diverse sources, however, this task is very difficult. During the last months, the Ministry of Agriculture has organized two macro regional workshops ‘consultation of the national plan of agro-energy’ involving the regions of Lambayeque, Ucayali and Piura, where different regional actors provided similar perceptions. These actors pointed out the lack of research of the whole production chain, the ignorance about the topic, the lack of a technological package, the existence of pests, the low performance of the crops, and the inappropriate handle of agrochemicals. They also mentioned the

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importance to conclude with the study of ecological and economic zoning, because they think that the region cannot promote biofuels if they do not know the total area of apt lands for the production of biofuels, not only for jatropha but also for sugar cane and other types of crops. At the end of the day, all pending activities need financial funds to be executed. At national level, four ministries - Agriculture, Energy, Industry and Environment – have the responsibility of biofuels policies, a situation that add complexity to the whole context. Nevertheless, the study has shown that MINEM is leading the biofuels platform, because of its resources and powers. This ministry has very significant financial funds to develop a new sustainable energy matrix in the country, sponsored by the IDB. This international bank plays a key role in the energy national sector since 2003, when it decided to finance the Camisea Gas Project, the first project of gas exploitation in the Amazon region. Since then, IDB has approved five more projects regarding energy issues (IDB, 2009). Without the support of IDB, MINEM would not probably work on biofuels as it is doing nowadays. There is a long list of cases where the international cooperation has influenced processes of public decision-making and policy implementation at different levels of governments. Some examples are the United States Agency for Development (USAID) and the Alternative Development Program in Peru, the World Bank and the Global Environmental Fund (GEF) for Biodiversity; the FAO and the Food Security Strategy, the World Wildlife Fund (WWF) and the Forest Certification Program, among others. Khanal (2009) used the PAA to understand and analyze the type of policy arrangements in Nepal that are emerging from the internalization of the climate change policy of ‘reducing emission from deforestation and forest degradation’ - REDD. The author showed how the World Bank is considered an important initiator of the REDD discussion in Nepal because the bank supports the Ministry of Forest and Soil Conservation with more than US $ 1 million to prepare the R‐Plan for Nepal by 2012. As a result, this ministry is seen as powerful to the sector (Khanal, 2009). The findings of both studies highlight the strategy of international actors to finance national sectors to influence the development and implementation of policies and, how one public sector leads a policy domain. However, changes can occur everywhere in every moment. Last May 2009, the MINEM presented a proposal to modify the existing law on the promotion of biofuels markets. This law project was very much criticized by different stakeholders since it was trying to derogate the mandatory character of mixing conventional fuels with biofuels, resulting in a market without political and technical guiding. This possible change was perceived as a threat, reason why several actors lobbied the ministry to stop their purposes. MINEM should organize a ‘public hearing’ on June 2009 to discuss the proposal and in the light of the opinions during the democratic consultation process, it was decided to avoid any change (MINEM, 2009). In fact, with the new bureau of the Ministry of Energy the situation seems to have changed and MINEM gives the impression of losing floor within the biofuels arena. Firstly, the different stakeholders did not agree with the proposal of the ministry to change the law; secondly, there is a lack of coordination among MINEM and the other sectors, pointed out by the interviewees, and thirdly, because it seems that the ministries of agriculture and environment are more active in the arena, working on the topic and developing their own policies. Moreover, the Third National Congress on Renewable Energies and Biofuels (COBER III) will be held in Lima in late 2009, lead by the Ministry of Environment, probably causing a new change in the policy process. It seems to be an opportunity for MINAM to

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position environmental approaches in the platform allowing new actors to appear. This situation can trigger new agreements and the allocation of new funds for the bioenergy sector. When the context has changed, the regional arrangement might have changed as well, because the case of the CTB and the other regional biofuels initiatives in San Martin and Piura are directly related to the political contexts. For example, when MINEM called for the ‘public hearing’, these regions prepared together a document with their comments on the proposal, mobilizing resources for a common goal: to maintain the validity of the current legal framework. This action created a precedent in the political regional biofuels arena and gave the opportunity to the different stakeholders to meet each other and share their problematic as a whole macro North region. 7.2 THEORETICAL FRAMEWORK The policy arrangement approach (PAA) allowed understanding how and why the regional arrangement process is organized and structured. The governance capacity approach was very suitable to complement the study giving high importance to the political context, which is determinant for the four dimensions of the arrangement. A conceptual framework is proposed from the integration of both approaches and the political context of the arrangement, which is represented in next Figure 8. Figure 8: PAA and IGC together as proposed conceptual framework

The Figure 8 shows the integration of the dimensions of the PAA and the congruencies of the Indicative Governance Capacity (IGC). To apply the IGC approach, the discourse dimension was defined as the center of the arrangement in order to find out to what extent the other dimensions are

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supporting the common shared discourse of ‘sustainable rural development’. The IGC introduces explicitly the political context in which the arrangement is embedded since it considers the external structural coherence that refers to the coherency among the regional arrangement and the global and national context. In that sense, the tetrahedron-adapted-model includes both levels of context. The dimensions separately do not provide a holistic view of the process; it is important to see the regional policy arrangement as a whole. Chaves (2008) proposed a conceptual framework for the analysis of a local policy arrangement for the implementation of forest management certification in an indigenous community in Peru, where the ‘historical context’ is a new dimension of an adapted tetrahedron, and the local setting is strongly influenced by the national context, which is also outlined by international framework. Both cases of policy arrangement at local and regional level cannot be analyzed isolated from the global and national context. “To grasp the situation of policy domain, it is important to understand the social, economic and ecological contexts in relation to each other” (Chaves, 2008). Moreover, Phung (2008) stated in his study of forestry rehabilitation in Vietnam, that the national general overview is required for the development of the country in order to balance interests of different sectors. The IGC approach provides an evaluative tool by assessing the coherence among the dimensions. In that sense, it examines to what extent the ‘indicators’ identified from the dimensions of the arrangement are supporting the shared discourse, integrating the context to the analysis. The ICG gives ‘certain level of congruence’ to a policy process, however it is hard to say in general terms what kind of level. To face this gap, the qualification of the IGC is based on the twelve ‘indicators’ selected for the analysis; the more ‘indicators’, the more accuracy of the results. However, the case has shown that the IGC cannot be only determined by the quantity of the ‘indicators’; the quality of them is -in some cases- determinant for the outcomes of the arrangement. It seems that financial resources and research are missing in the arrangement, which are determinants for the progress of the CTB, even all the other ‘indicators’ are supporting the shared discourse. In addition, Phung (2008) pointed out the necessity to improve certain ‘indicators’ to ensure congruence in the four dimensions required for a high IGC of the forestry rehabilitation arrangement in Vietnam. He concluded that “converging discourses, complete change of the rules and real inclusion of non-state actors in the process will be determining in the mobilization of new resources for forest rehabilitation” (Phung, 2008: 82). Political modernization has touched Peru with the implementation of decentralization policies, a process that involved the whole country, demanding an adaptation and adjustment of the powers, structures, rules, behaviors, and the society in general. Regional and local governments are recognized as new authorities nationwide, leading to economic, political, environmental and social shifts. The study of the Turkish political modernization in nature conservation (Adem, 2007) refers also to decentralization process of the country that started in 2004 with the Local Administrations Reform, structuring the environmental governance on a municipality basis. This type of process allows the incursion of new actors in different political platforms, such as the biofuels domain. Participation is seen now as the key tool for governance at different levels. Phung (2008: 82) also concluded in his study that “besides policies to ensure sufficient resources, bottom up approach and participation must be strictly conformed in the establishments of projects to formulate well-defined goals”.

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7.3 METHODOLOGY Applying semi-structured interviews was the best way to collect information during the fieldwork, because people expressed themselves through the interviews and told their stories from their points of views. More indirect stakeholders –e.g. academic sector, local governments, water authorities, farmers, etc.– could have provided additional information for the analysis of the process but this was not possible especially because of time constrains. To abate this situation, two external actors who represent the private sector and the international cooperation in the region were considered in the sample of seventeen interviews, together with all CTB members, and the four national key people in charge of biofuels within each ministry involved. The findings of the case study can be analytically generalized, that means, bringing the findings to a theory. Both selected theoretical approaches allow the analysis of each concept identified in the policy arrangement and the integration of both approaches illustrates the strong relation of the regional arrangement and the political context. The CTB cannot exist without the current national political context of biofuels and the implementation of a decentralization policy. Other case studies in Vietnam, Nepal and Peru relate diverse policy arrangements to their global and national contexts (Adem, 2007; Chaves, 2008; Phung, 2008; Khanal, 2009). In addition, the other regional initiatives like those in Piura and San Martin regions can be analyzed by applying the same methodology and approaches. The case of the CTB is the first look at the biofuels platform, and conducting a multiple case including those regions is the second step required in order to understand the biofuels domain as a whole, because it allows the researcher to figure out whether there is the same or other ‘indicators’ as part of the arrangement dimensions that can be determinants for these processes too, and to find out the degree of governance capacity of each ‘table’, and where the strengths and weaknesses of the processes are.

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8. CONCLUSIONS Lambayeque is a potential region to produce biofuels, especially ethanol that is extracted from sugar cane and biodiesel that comes from jatropha. Since May 2008, there is an institutionalized space of dialogue called Conciliation Table on Biofuels (CTB), formed by eleven members who represent public and private sectors as well as civil society, and lead by the Regional Management of Economic Development, which is sponsored by the Regional Government of Lambayeque. The CTB was created in the context of several national biofuels policies and the decentralization policy in the country. The current study provides important findings and lessons about the regional biofuels arrangement together with the national political context in Peru. There is something to conclude from the case of the CTB in Lambayeque. The way of conducting the research with the use of the two theoretical approaches has helped the research to achieve the main objective. The following general conclusions can be drawn from the initial research questions. What is the political context of biofuels in Peru, regarding its legal framework, the institutions involved and the levels of government?

� International context of climate change and renewable energies brought to Peru a new view of

sustainable development. Peru has internalized these global discourses and today it counts with a national political platform of biofuels, even though this platform seems to be very complex for two main reasons. Firstly, because it is framed by four sectors: Energy and Mines, Environment, Agriculture and Production, all of which have different interests in the development of biofuels. Secondly, because decentralization process was a major socio-political shift wanting to promote regional and local development within a unitary and decentralized state in order to articulate national development and interests. This new state structure allows regional and local governments to have the authority to decide over their jurisdictions and participate in decision-making processes.

� International actors are important in this type of national processes. The Ministry of Energy and Mines has financial funds from the Interamerican Development Bank to build up the sector of renewable energies, but politically it is losing floor since the bureau was changed some months ago. Taking advantage of this situation, the Ministry of Environment is going to lead the next COBER III, where it can position itself in the biofuels platform with environmental ideas. Also FAO is cooperating with the Ministry of Agriculture working together on food security.

� The decentralization process is part of the political modernization touching Peru; without this national change, the CTB and other similar regional initiatives would not exist, as the current legal framework brings to the regions the faculties to have political participation and decision.

What are the characteristics of the CTB in Lambayeque, regarding the participation of actors, the creation of coalitions, the distribution of power and resources, the (in) formal cooperation and the sharing of ideas?

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� The CTB also only exists because of the strong cooperation of two organizations (one private NGO and one public body). This coalition is the basis of the regional policy arrangement, because both actors share the same interests, funds, knowledge and authority. SNV and GRDE are the main players of the arrangement, but the first one is the driving force of the CTB and also main promoter of other regional arrangements like those in Piura and San Martin.

� Despite the CTB has been working only for one year, its potential is still enormous, requiring medium and long term to consolidate its work. Up to today, we cannot see too many tangible outcomes since the first year was mainly to share information and to be familiar with the topic (regionally and nationally). Moreover, some formal and informal agreements have been established among the actors; SNV participates in most of them.

� The CTB lacks of sufficient financial funds, reason why it is not possible to design and implement research in the region. Members have recognized that research is fundamental for future planning and they are looking for new alliances with other actors in order to start the research. In this sense, private sector and international cooperation seem to be attractive allies since they are actually developing biofuels projects in the region. In addition, considering local governments have their own budget, they could be a possible ally as well, being motivated to develop small biofuels projects with their communities by providing technical assistance.

� ‘Sustainable Rural Development’ is the common shared discourse that prevails in the biofuels regional sphere, framed by different interests and ideas (economic, social, and environmental) among the sectors and stakeholders. Despite some members are not participating in the CTB meetings, the other members who support the work have maintained the same enthusiasm as from the beginning. Nevertheless, the CTB dynamic seems to be a bit confusing since there are no formal internal rules, which determine the tasks and responsibilities of each member as well as procedures for the functionality of the ‘table’.

To what extent will the CTB process be able to develop an adequate biofuels policy, considering the extent of shared ideas, coherence among dimensions and embeddedness in socio-political contexts? � According to the qualitative analysis of the ‘indicators’, the indicative governance capacity of

the regional policy arrangement is high; it seems there is coherence among the four dimensions. However, the lack of financial funds and research is determinant for supporting the common shared discourse of the CTB. These elements of the arrangement cannot have the same weight or importance than the other elements such as rules or authority. Without research, for instance on jatropha, the region cannot go farther in promoting biodiesel production. The CTB will succeed if they improve these elements in the medium term, otherwise, they may spend many years in the same situation, without any substantial progress.

� The CTB is not an isolated biofuel regional process; it is strongly embedded in the international and national political contexts as well as the decentralization national policy, both provide meaning to its existence. The use of the policy arrangement approach and the indicative governance capacity approach determined the relation between the regional arrangement and the contexts, pointing out the necessity to include explicitly these contexts in the tetrahedron model.

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9. RECOMMENDATIONS Two types of recommendations can derive from the research: for practice and for science. 9.1 RECOMMENDATIONS FOR PRACTICE � It seems to be imperative to mobilize financial funds for implementing research in the region, as

it is perceived a key of success; different stakeholders pointed the lack of research as the main problem. It is suggested that the CTB designs a strategy to mobilize financial resources in the region and at national and international levels. There are several accessible funds but it is necessary to summit development projects in order to compete for the resources. In addition, political lobby might be required at regional and central levels. In some circumstances, political decision at central level can be the last piece of the chain to prioritize the research on energy crops in order to allocate more public funds. Research is a task for everyone. Work in cooperation is frequently one way to guarantee the success of goals, making the process more participative. The private and academic sectors can also be important actors in this field since they are doing some studies; in this sense, it is suggested to explore new possibilities of cooperation with external actors in order to support research in the region. In the case of private sector, the CTB needs to incorporate the ethanol production as a strategic way to develop the rural areas. Local farmers and local governments seem to be prominent stakeholders. Small farmers should be included from the design phase, and national biofuels productive chains must be implemented under social, environmental, technical and economic approaches (Ipenza, 2009).

� The case has shown that most members of the CTB consider necessary to have formal rules.

Moreover, some of them are confused about their duties and tasks; in that sense, it is strongly advised to establish internal formal rules, define duties and responsibilities of each member as well as procedures for the functionality of the ‘table’. This type of guidance is useful to structure the process and to promote more coordination and jointly work with the other regional initiatives such as those in Piura and San Martin; whether the responsibilities and functions of each member are well defined, then, the members will not duplicate efforts in pursuing the same activities. Moreover, the Ministry of Agriculture is designing the National Strategy of Agro Energy, which is going to be implemented regionally, thus, it is important to take advantage on the fact that the SNV is also a main promoter of biofuels in the other regions and these regions need to be prepared for the new sectoral policies, which are very probable to include the ‘lifecycle of the energy crop’ as a main criteria for decision making.

9.2 RECOMMENDATIONS FOR SCIENCE � To acquire a better understanding of the Lambayeque policy process, it is suggested to conduct

more studies in the region that include other external actors in the sample in order to complement the results and to increase the knowledge about the network of participants in Lambayeque. A next step to understand how the other biofuels initiatives are working in the country is to apply a multiple case, including the policy biofuels arrangements of Piura and San Martin regions. In that sense, both theoretical approaches and same methodology need to be

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applied in order to acquire comparable findings. Moreover, these individual regional arrangements could be seen as one entire national process. To assess the indicative governance capacity of the other arrangements, same ‘indicators’ need to be evaluated; it will be very interesting to find out if these ‘tables’ lack -for example- of financial funds and research. However, a multiple case allows the researcher to figure out whether there are other ‘indicators’ as part of the arrangement dimensions, which can be determinant for these processes too. Moreover, people learn from other experiences and this is a learning process.

� The case demonstrates the direct relation between the regional arrangement in Lambayeque and the political national context of Peru. The conceptual framework proposed advises the analysis of the context where the arrangement is embedded, which is very important not only to see the relation among the governmental levels and to understand their structures from an institutional perspective, but also to predict possible changes within the dimensions whether some elements in the political context change.

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APPENDICES A. TOPIC LIST AND QUESTIONNAIRES Actors and coalitions − Members of the Table − Organization of the actors inside the Table − Agreements/Coalitions/partnerships/contracts − Working sub-groups − Key actors outside the Table Rules of the game − Legal framework of establishment − Immersed National Legal framework − Regional and national government structure − Internal regulations of the bureau (Table), formal and informal (meetings, responsabilities,

functions and roles, activities, tasks, goals) − Procedures for approval of regional investments projects on BF − Internal and external coordination (regional and national) Resources and power − Funds (public and private) − Funds mobilization − Research − Technical knowledge − Political lobby − Private projects − International Cooperation, academic sector. Discourses − Shared interests − Common discourses − Decentralization − Climate change − Social inclusion − Economic growth

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Questionnaire - Lambayeque

1. What is your regional institutional policy on biofuels? 2. How do you see BF as an alternative to be developed in the region? 3. How has the Conciliation Table on Biofuels been formed and how has your institution been

involved? 4. What is the function or role of your institution within the CTB? 5. Have you participated in all meetings of the CTB? 6. How is your institution making progress in meeting the objectives of the CTB? 7. In your opinion, who is driving this initiative and who do you consider is leading the process of

the CTB? 8. What kind of internal regulations does the Table follow? 9. What procedure should be followed to accept new members, how are decisions made, how are

delegated the functions and responsibilities? 10. How is coordination among the members? What mechanisms are there? 11. Do you consider that the exchange of information between members is adequate? 12. What is the role of the Technical Secretariat? Is it met? 13. Has the Table an annual action plan? Who has it prepared and how has it been adopted? 14. Do you know of agreements, contracts, and partnerships between members of the CTB for the

specific topic of BF? 15. Do you consider that the CTB is participative and representative? 16. What regional actors should be part of the Conciliation Table? Why are not yet? 17. How important do you consider “research” in the field of biofuels? 18. Which institution should do research? Who has the responsibility to do so? 19. What is the crop for BFs production that should be given highest priority at regional level? 20. What is the main discourse that is shared among members? 21. Do you consider that there are different interests and discrepancies among members? 22. What are the strengths and weakness of the CTB as a working group? 23. What action would you take today to improve the dynamics of the CTB as a working group? 24. Do you consider if the CTB has the capacity to meet its goals? 25. Is there a common financial fund for the CTB? 26. Which member (institution) has committed funds to implement the activities of the Table? 27. What mechanisms and problems do exist at regional level for mobilizing funds for agro-energy

projects? 28. One of the objectives of the Table is "to propose regulations for the regional sustainable

development of BF with social inclusion"; has the topic been worked by the members? 29. Is there a regional or national legal framework that would oblige the investor to develop the

rural hinterland of the project? 30. Is there any regional training program for farmers for the development of BF? 31. What is the idea of developing projects with social inclusion? How did you think about this? 32. How is water resources managed in the region today? 33. What are the governmental mechanisms to approve or give their good opinion to a new

investment project in agriculture? 34. Who does decide within the Government to prioritize a regional issue? What is the hierarchy? 35. What mechanisms of coordination there are with the Central Government?

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Questionnaire - Lima

1. How comes the interest of the Ministry to work the issue of BF? 2. The Ministry policy on energy in general was to diversify the energetic matrix with the same

weight: gas, oil and renewable energies. After the last global changes, does the Ministry maintain the same policy?

3. Do you consider BFs as an alternative for local, regional and national development? 4. Do you feel the same enthusiasm on BF than two years ago (Cober I and Cober II)? 5. How is your institution making progress in implementing the Law on Promotion of BF?

(maybe a program, an annual action plan, a strategy) 6. There are many different actors and institutions working on the issue, but is the Ministry

working at intersectorial level? 7. Do you have agreements, arrangements, conventions or strategic associations with other

institutions to develop BF? 8. How is research on BF been promoted by your sector? 9. What is the crop for BF production that should be given highest priority (sugar cane, oil palm,

etc.)? 10. How are water resources managed in the country today and how will water use for the

production of BF be controlled? 11. What is the main discourse that you see behind the issue of BF? 12. Do you believe that there are different interests among different sectors working in the field of

BF? 13. Does the Ministry have a specific fund for the development of BF at national and regional

levels? 14. Is there any financial support from external actors, specifically for the development of BF? 15. Has the Ministry any training program for farmers for the development of BF? 16. Is there any regional or national legal framework that would oblige the investor to develop the

rural hinterland of the project? 17. What are the strengths and weaknesses of your sector for the development of BF at the national

level? 18. What action will you take today to improve the BF policy? 19. Do you thing BF policy can be develop in the context of decentralization and participation (at

regional level)? 20. How is coordination with regional governments? 21. Is there any agreement or arrangement with a regional government to work on BF?

22. Do you know any regional initiative to develop BF in a sustainable manner (at political,

technical or scientific level)? (example: Conciliation Table on BF in Lambayeque, PROBIOSAM in Saint Martin, Technical Table on BF in Piura)

23. Do you considered these initiatives as example of decentralization and participation? 24. How could be improved the work of these initiatives from your sector? 25. Do you think Regions have the capacity to develop biofuel regional arrangement, considering

the actors involved, the resources they have (political power, economic funds, technical knowledge, etc), the rules and norms they follow ad the discourses they predict?

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Questionnaire - private sector

1. What are your company biofuels policy, vision and objectives? 2. How do you see BF as an alternative for the development of Lambayeque? 3. In which way is your company applying the concepts of sustainable development (social,

economic, environmental, etc) and social inclusion? 4. What do you consider should be your role as private sector in the developing of the region? 5. What do you think is the main discourse about biofuels in the region? 6. Which institution do you think should do research? 7. Is your company doing research on the field of biofuels? 8. Is your company interested in developing another crop for biofuels, and not only sugar cane? 9. Is your company committed with the region to develop the rural hinterland of the project? 10. How is your company managing the scarcity issue of water resources? 11. Has your company any agreement or arrangement with a regional actor/institution to develop

biofuels? 12. Do you know any regional initiative to develop BF in a sustainable manner (at political,

technical or scientific level)? (example: Conciliation Table on BF in Lambayeque, PROBIOSAM in Saint Martin, Technical Table on BF in Piura)

13. Have you heard about the Conciliation Table on Biofuels in Lambayeque and has any member of the Table invited you to participate in the meetings, to be part of the CTB?

14. In your opinion, what are the advantages for your company to be part of the Conciliation Table on Biofuels?

15. Do you know regional actors that should be part of the Conciliation Table? 16. Do you consider these initiatives as example of decentralization and participation? 17. How could be improved the work of these initiatives from your sector (private sector)? 18. Do you think Regions have the capacity to develop biofuel regional arrangement, considering

the actors involved, the resources they have (political power, economic funds, technical knowledge, etc), the rules and norms they follow ad the discourses they predict?

19. Are you willing to be part of the Conciliation Table on Biofuels in Lambayeque? Why, why not?

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B. CTB ACTION PLAN 2008 AND 2009 Action Plan 2008

Activities

1 Fortalecimiento de un espacio público y privado para la promoción de biocombustibles

1.1 Formulación de la Resolución Ejecutiva 1.2. Instalación de la Mesa de Concertación de Biocombustibles 1.3. Pasantía a la empresa HPO 1.4. Reuniones de trabajo 1.5. Capacitación en Energías Renovables y Biocombustibles 2 Fomentar el desarrollo de investigación 2.1. Investigación de adaptabilidad Piñón blanco en E.E. Vista Florida 2.2. Definición del Paquete Tecnológico 2.3. Difusión de paquete tecnológico 3 Desarrollo comercial de biocombustibles 3.1 Promover el cultivo de Jatropha en CC bajo la Modalidad de NI 3.2. Promoción de los servicios de asistencia técnica 4 Elaboración de una base informativa 4.1. Identificación de zonas potenciales para el desarrollo del cultivo de Piñón 4.2. Identificación de CC, Asociaciones y/o Productores individuales 4.3. Elaboración de estudios sobre situación económico productiva de productores 5 Formulación de propuestas de política 5.1 Diseño participativo de políticas para la promoción de biocombustibles 6 Gestión de financiamiento 6.1 Formulación participativa de proyectos 6.2 Gestión de financiamiento para el desarrollo de proyecto.

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Action Plan 2009

N° Actividad Meta Responsable Fecha

1 Fortalecimiento de un espacio público y privado para la promoción de biocombustibles

01 plan trabajo 1.1 Elaboración de documentos de gestión (plan de trabajo y reglamento de funcionamiento) 01 reglamento

GRDE y SNV Ene – Mar 2009

1.2 Pasantía San Martín Planta Biodiesel 01 pasantía SNV, GRDE, INIA, Abril 2009 1.3 Reuniones de trabajo 06 reuniones Miembros Mesa Concertación Permanente 1.4 Capacitación en Energías Renovables y

Biocombustibles 02 eventos DREMH-SNV Jun y Oct

2009 2 Fomentar el desarrollo de investigación y

conocimiento

02 visitas de campo INIA – SENASA – SNV Agos. - Dic 2009

2.1 Apoyo a las acciones de Investigación de adaptabilidad Piñón blanco en E.E. Vista Florida 01 Diagnóstico de plagas en

cultivos de Motupe SENASA - DED Agos. –

Sep.2009

2.2 Definición del Paquete Tecnológico Agronómico

01 paquete tecnológico INIA – DRA – SENASA - SNV

Abr-Dic 2009

2.3 Difusión de paquete tecnológico Agronómico 01 Folleto INIA – DRA - SNV Ago-Dic 2009 2.4 Promoción de aplicación de tecnologías post-

cosecha 01 Evento de difusión DED Sep. 2009

2.5 Intercambio de conocimiento en biocombustibles

Información diversa GRDE - SNV Permanente

3 Desarrollo comercial de biocombustibles 01 parcela demostrativa con utilización de aguas de segundo uso

HPO – GRDE – SNV - DIREPRO

3.1 Promover el cultivo de Jatropha en CC bajo la Modalidad de Negocios Inclusivos

Difusión de estudios de factibilidad económica y social

GRDE - SNV

Feb-Dic 2009

3.1 Promoción de los servicios de asistencia técnica

01 evento INIA – DRA -SENASA

4 Elaboración de una base informativa 4.1 Identificación Asociaciones y/o Productores

individuales DRA – IMAR - SNV Feb – Jun

2009 5 Formulación de propuestas de política

5.1 Diseño participativo de políticas para la promoción de biocombustibles

01 propuesta presentada Miembros MCB Feb – Nov 2009

5.2 Estudio de caso “Política de Acuerdo” 01 Trabajo de Investigación Tesista Maestría Ene – Dic 2009

6 Gestión de financiamiento 6.1 Formulación participativa de proyectos 01 Proyecto SNV – HPO – IMAR - GRDE Mar – Dic

2009 6.2 Gestión de financiamiento para el desarrollo

de proyecto. 01 Proyecto financiado SNV – HPO – IMAR - GRDE Jul – Dic 2009

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C. LIST OF LEGISLATURE REVIEWED 1. General Law of Environment – Law 28611 2. Law on the Basis of Decentralization – Law 27783 3. Law that correct four article of the Organic Law of Regional Governments - Law 29053 4. Law on the Promotion of Biofuels Markets – Law 28054 5. Law on Fiscal Decentralization - Supreme Decree (SD) Nº 114-2005-EF 6. Law of Creation, Organization and Functions of the Ministry of Environment - Decree 1013 7. Ministerial Resolution Nº 0155-2001-AG - National Plan of Promotion Oil Palm 8. Ministerial Resolution 0315 – 2009 – AG, constitution of the Agro-energy work group. 9. Organic Law for the sustainable use of natural resources - Law 26821 10. Organic Law of Regional Governments – Law 27867 11. Organic Law of Local Governments – Law 27972 12. Organic Law of Executive Branch – Law 29158 13. Policy guidelines for biofuels - Ministry of Agriculture 2008 14. Regulation of the Law 28054 – DS 013-2005-MINEM 15. Regulation of the Law 28054 for the commercialization – DS 021 – 2007 – MEM 16. Regional Executive Resolution 215-2008-GRLAMB 17. Regional Ordinance N 027-2008-GRSM/CR 18. Regional Ordinance N 047-2006-GRH/CR 19. Supreme Decree 015-2000-AG - National Interest the Installation of Oil Palm Plantations 20. Supreme Decree 04-2008-AG – National Interest for energy proposes the installation of Wild

Cane and Bamboo Plantations. 21. Supreme Decree 016-2008-AG - National Interest for the installation of Jatropha curcas

(jatropha) y Ricinus communis (higuerilla) plantations.

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D. LIST OF PARTICIPANTS IN CTB MEETINGS CTB meeting February 2009

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Photos of CTB meeting, May 2009

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E. LIST OF INTERNATIONAL AGREEMENTS REVIEWED 1. Convention on Biological Diversity 2. European Union: Strategy for Biofuel (SEC 2006 - 142) 3. Food and Agriculture Organization (FAO): State of Food and Agriculture (SOFA 2008) and

Bioenergy and Food Security Project (BEFS) 4. Inter-American Development Bank (IDB): Scored Card, Strategic Plan of Sustainable Energy and

Bioenergy in Peru (NUMES) and Program for the Development of a New Sustainable Energy Matrix (PEES)

5. Kyoto Protocol 6. The Roundtable on Sustainable Biofuels: ‘Version Zero’ 7. United Nations (UN): report on ‘Sustainable Energy’ (UN-Energy, 2007) 8. World Bank: World Development Report 2008 - Agriculture for Development

F. LIST OF KEY ACTORS INTERVIEWED PERSON INSTITTUTION ACRONYM Rosa Meléndez Estuardo Díaz Luis García

Regional Management of Economic Development GRDE

Francisco Ríos Regional Management of Natural Resources GRRNN Carlos Arrascue Regional Agrarian Directorate DRA Johny Villalobos Regional Directorate of Energy, Mines and Hydrocarbons DREMH Esmilda Arévalo National Service of Agrarian Health SENASA Romelio Díaz National Institute of Agrarian Research INIA José Muró Netherlands Development Organisation SNV José Tolentino Center of Social Studies Solidarity CES Solidarity Victor Santa Cruz Support Institute for Management of Risk Water IMAR North Coast Pedro Pita Foundation for Rural Development FUNDER Henry Saldaña Biofuels from Peru BIOPER Tom Schneider Company Arena Verde SA Arena Verde Hugo Pérez German Service for Social and Technical Co-operation DED Gustavo Vivanco Ministry of Environment MINAM Henry García Ministry of Energy and Mines MINEM Roxanna Orrego Ministry of Agriculture MINAG Luis Paz Ministry of Production PRODUCE